gB  *KICE  REGULATION  OF  STEEL 

I;  HEARING 

l^  BEFORE  THE 

~  COMMITTEE  ON  INTERSTATE  COMMERCE 
united' STATES,  SENATE 

S  '-" 

SIXTY-FIFTH ,  CONGRESS 
330  I 

^   ^  '  FIRST  SESSION 

106 

ON 


S.  2756 


A  BILL  TO  PROVIDE  FURTHER  FOR  THE  NATIONAL  SECURITY 

AND  DEFENSE  BY  REGULATING  THE  PRODUCTION,  SALE, 

AND  DISTRIBUTION  OF  IRON  ORE,  IRON,  STEEL, 

AND  OTHER  PRODUCTS 


SEPTEMBER  21,  1917 


PAKT  1 


Printed  for  the  use  of  the  Committee  on  Interstate  Commerce 


%J*   UNIVERSITY  OF  CALIFORNIA 
#^  LOS  ANGELES 

'^^  0CT14  1?:3 

LIBRARY 
WASHINGTON       GOVT.  PUBS.  SERV. 

GOVERNMENT  PRINTING   OFFICE 
1917 


COMMITTEE  ON  INTERSTATE  COMMERCE. 

FRANCIS  G.  NEWLANDS,  of  Nevada,  Chairman. 
ELLISON  D.  SMITH,  of  Sou. h  Carolina.  OSCAR  W.  UNDERWOOD,  of  Alabama. 

ATLEE  POMERENE,  of  Ohio.  ALBERT  B.  CUMMINS,  of  Iowa. 

HENRY  L.  MYERS,  of  Montana.  CHARLES  E.  TOWNSEND,  of  Michigan. 

JOE  T.   ROBINSON,  of  Arkansas.  ROBERT  M.  LA  FOLLETTE,  of  Wisconsin. 

WILLARD  SAULSBURY,  of  Delaware.  MILES  POINDEXTER,  of  Washington. 

WILLIAM  H.  THOMPSON,  of  Knnsas.  GEORGE  P.  McLEAN,  of  Connecticut. 

JAS.   HAMILTON  LEWIS,  of  Illinois.  JAMES  E.  WATSON,  of  Indiana. 

THOMAS  P.  GORE,  of  Oklahoma.  FRANK  B.  KELLOGG,  of  Minnesota. 

Hall  McAllister,  Clerk. 


TABLE  OF  CONTENTS. 


statement  of:  Page. 

Davles,  Hon.  Joseph  E 7 

Fairchild,  Arthur  W 35 

Bill  (S.  2756)  to  provide  fui'ther  for  national  security,  etc 5 

Bird  Coal  &  Coke  Co.'s  letters 33 

Proposed  amendments  by  Mr.  Fairchild 38 

Maximum  prices  in  England 58 

Table  of  monthly  prices 61 

3 


PEICE  EEGULATION  OF  STEEL. 


FRIDAY,  SEPTEMBER  21,   1917. 

United  States  Senate, 
Committee  on  Interstate  Commerce, 

Washington,  D.  C. 

The  committee  met  pursuant  to  call,  at  10  o'clock  a.  m.,  at  room  326, 
Semite  Office  Building,  Senator  Francis  G.  Newlands  presiding. 

Present:  Senators  Newlands  (chairman),  Pomerene,  and  Cum- 
mings. 

Also  present :  Hon.  Joseph  E.  Davies  and  Hon.  Victor  Murdock, 
•Commissioners  of  the  Federal  Trade  Commission;  Dr.  Francis 
Walker,  of  the  Federal  Trade  Commission;  and  Arthur  W.  Fair- 
child,  attorney  at  law,  of  jMilwaukee,  Wis. 

The  committee  proceeded  to  consider  the  bill  (S.  2756)  to  provide 
further  for  the  national  security  and  defense  by  regulating  the  pro- 
duction, sale,  and  distribution  of  iron  ore,  iron,  steel,  and  their 
products,  as  follows: 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United 
States  of  America  in  Congress  asseinbled,  That  by  reason  of  the  existence  of  a 
state  of  war  it  is  essential  to  tlie  national  security  and  defense  for  the  successful 
prosecution  of  the  war  and  for  the  sui)i)ort  and  maintenance  of  the  Army  and 
Navy  to  assure  an  adequate  supply  and  equitable  distribution  at  reasonable 
prices  and  to  facilitate  the  movement  of  iron,  iron  ore.  steel,  and  their  products. 
and  because  thereof  the  President  of  the  United  States  shall  be.  and  he  is 
hereby,  authorized  and  empowered,  whenever  and  wherever  in  his  judtiment 
necessary  for  the  efficient  prosecution  of  the  war  and  for  the  purposes  aforesaid, 
to  fix  the  price  of  iron  ore,  iron,  steel,  and  their  products  wherever  and  wlien- 
ever  sold,  either  by  producer  or  dealer,  to  establish  rules  for  the  regulation  of 
and  to  regulate  the  method  of  production,  sale,  shipment,  distribution,  apiior- 
tionment,  or  .storage  thereof  among  dealers  and  consumers,  domestic  or  foreign. 
Said  authority  and  power  may  be  exercised  by  him  in  each  case  thi-ough  the 
agency  of  the  Federal  Trade  Commission  during  the  war  or  for  such  part  of 
said  time  as  in  his  .indgment  may  be  necessary. 

Then  if,  in  the  opinion  of  the  President,  any  such  producer  or  dealer  fails 
i)r  neglects  to  conform  to  such  prices  or  regulations,  or  to  conduct  his  business 
^efficiently  under  the  regulations  and  control  of  the  President  as  aforesaid,  or 
conducts  it  in  a  manner  prejudicial  to  the  public  interest,  then  the  President 
is  hereby  authorized  and  empowered  in  every  such  case  to  requisition  and  take 
over  the  plant,  business,  and  all  appurtenances  thereof  belonging  to  such  pro- 
ducer or  dealer  as  a  going  concern,  and  to  operate  or  cau.se  the  same  to  be 
operated  in  such  manner  and  through  such  agency  as  he  may  direct  during  the 
period  of  the  war,  or  for  such  part  of  said  time  as  in  his  judgment  may  be 
necessary. 

That  any  producer  or  dealer  whose  plant,  business,  and  appurtenances  shall 
have  been  requisitioned  or  taken  over  by  the  President  shall  be  paid  a  just 
compensation  for  the  use  thereof  during  the  period  that  the  same  may  be 
requisitioned  or  taken  over  as  aforesaid,  whicli  compensation  the  President 
shall  fix  or  cause  to  be  fixed  by  the  Federal  Trade  Commission. 

That  if  tlie  prices  so  fixed,  or  if.  in  the  case  of  the  taking  over  or  requisition- 
ing of  the  plant,  business,  and  the  appurtenances  of  any   such  producer  or 


6  PRICE  BEGULATION   OF   STEEL. 

dealer,  the  compensation  therefor  as  determined  by  the  provisions  of  this  ace 
be  not  satisfactory  to  the  person  or  persons  entitled  to  receive  the  same,  such 
person  shall  be  paid  75  iier  cent  of  the  amount  so  determined,  and  shall  be  en- 
titled to  sue  the  United  States  to  recover  such  further  sum  as,  added  to  said 
75  per  cent,  will  make  up  such  amount  as  will  be  just  compensation  iu  tlie 
manner  provided  by  section  24,  paragraph  20,  and  section  145  of  the  Judicial 
Code. 

While  operating,  or  causing  to  be  operated,  any  such  plants  or  business  and 
appurtenances  thereof,  the  President  is  authorized  to  prescribe  such  regulations 
as  he  may  deem  essential  for  the  employment,  control,  and  compensation  of  the 
employees  necessary  to  conduct  the  same. 

Or  if  the  President  of  the  United  States  shall  be  of  the  opinion  that  he  can 
thereby  better  provide  for  the  common  defense  and  the  purposes  aforesaid  and 
whenever,  in  his  judgment,  it  shall  be  necessary  for  the  successful  prosecution 
of  the  war,  then  he  is  hereby  authorized  and  empowered  to  require  any  or  all 
producers  of  iron,  iron  ore,  steel,  and  their  products  in  any  section  of  tlie  United 
States,  or  in  the  entire  United  States,  to  sell  their  products  only  to  the  United 
States  through  an  agency  to  be  designated  by  the  President,  such  agency  to 
regulate  the  resale  of  such  iron  ore,  iron,  steel,  and  their  products  and  the 
prices  thereof,  and  to  establish  rules  for  the  regulation  of  and  to  i*egulate  the 
laethods  of  production,  shipment,  distribution,  apportionment,  or  storage  tliereof 
among  dealers,  consumers,  domestic  or  foreign,  and  to  make  payment  of  the 
purchase  price  thereof  to  the  producers  thereof,  or  to  the  person  or  persons 
legally  entitled  to  said  payment. 

That  within  15  days  after  notice  from  the  agency  so  designated  to  any  pro- 
ducer of  iron  ore,  iron,  steel,  and  their  products  that  his  or  its  output  is  to  be 
so  purchased  by  the  United  States  as  hereinbefore  described,  such  producer 
shall  cease  shipments  of  said  product  upon  his  own  account  and  shall  transmit 
to  such  agency  all  orders  received  and  unfilled  or  partially  unfilled,  showing 
the  exact  extent  to  which  shipments  have  been  made  thereon,  and  thereafter 
all  shipments  shall  be  made  only  on  authority  of  the  agency  designated  by 
the  President,  and  thereafter  no  such  producer  shall  sell  any  of  said  products 
except  to  the  United  States  through  such  agency,  and  the  said  agency  alone  is 
hereby  authorized  and  empowered  to  purchase  during  the  continuance  of  the 
I'equirement  the  output  of  such  protlucers. 

That  the  prices  to  be  paid  for  sucli  products  so  purchased  shall  be  based 
upon  a  fair  and  just  profit  over  and  above  the  cost  of  production,  including 
proper  maintenance  and  depletion  charges,  the  reasonableness  of  such  profits 
and  cost  of  production  to  be  determined  by  the  Federal  Trade  Commission, 
and  if  the  prices  fixed  by  the  said  commission  of  any  such  product  purchased 
by  the  United  States  as  hereinbefore  described  be  unsatisfactory  to  the  person 
or  persons  entitled  to  receive  the  same,  such  person  or  persons  shall  be  paid 
75  per  cent  of  the  amount  so  determined  and  shall  be  entitled  to  sue  the 
United  States  to  recover  such  further  sum  as  added  to  said  75  per  cent  will 
make  up  such  amount  as  will  be  just  compensation  in  the  manner  provided  by 
section  24,  paragraph  20,  and  section  145  of  the  Judicial  Code.  All  such 
products  so  sold  to  the  United  States  shall  be  sold  by  the  United  States  at 
such  uniform  prices,  quality  considered,  as  may  be  practicable  and  as  may 
be  determined  by  said  agency  to  be  just  and  fair. 

Any  moneys  received  by  the  United  States  for  the  sale  of  any  such  iron  ore, 
iron,  steel,  and  their  products  may,  in  the  discretion  of  the  President,  be 
used  as  a  revolving  fund  for  further  carrying  out  the  purposes  of  this  section. 
Any  moneys  not  so  used  shall  be  covered  into  the  Treasury  as  miscellaneous 
receipts. 

That  when  directed  by  the  President,  the  Federal  Trade  Commission  is  hereby 
required  to  proceed  to' make  full  inquiry,  giving  such  notice  as  it  may  deem 
practicid^le,  into  the  cost  of  ))roducing  under  reasonably  eflicient  manage- 
ment at  the  various  places  of  production  the  following  commodities,  to  wit : 
Iron  ore,  iron,  steel,  and  their  products. 

Tlie  books,  correspondence,  records,  and  papers  in  any  way  referring  to 
transactions  of  any  kind  relating  to  the  mining,  production,  sale,  or  distribution 
of  all  producers  or  other  persons  whose  iron  ore,  iron,  steel,  or  their  products 
have  or  may  become  subject  to  tliis  act,  and  the  books,  correspondence,  records, 
and  papers  of  any  person  applying  for  the  purchase  of  iron  ore,  iron,  steel,  or 
their  products  from  the  United  States  shall  at  all  times  be  subject  to  investi- 
gation by  the  said  agency,  such  person  or  persons  shall  promptly  furnish  said 
agency  any  data  relating  to  the  business  of  such  person  or  persons  which  said 


PEICE   REGULATION   OF   STEEL.  7 

agency  may  call  for,  and  said  agency  is  hereby  authorized  to  procure  informa- 
tion with  reference  to  the  business  of  sucli  producers  aud  the  customers  there- 
for iu  the  manner  provided  for  in  sections  G  and  9  of  the  act  of  Congress 
approved  September  26,  1914,  entitled  ''An  act  to  create  a  Federal  Trade 
Commission,  to  define  its  powers  and  duties,  and  for  other  purposes,"  and  s;iid 
agency  is  hereby  authorized  nnd  empowered  to  exercise  all  the  powers  granted 
to  the  Federal  Trade  Commission  by  said  act  for  the  carrying  out  of  the 
purposes  of  this  act. 

Having  completed  its  inquiiy  respecting  any  connnodity  in  any  locality,  it 
shall,  if  the  President  hjis  decided  to  fix  the  prices  at  which  any  such  com- 
modity shall  be  sold  by  producers  nnd  dealers  generally,  fix  anrl  publish  maxi- 
mum prices  for  both  producers  of  and  dealers  in  any  such  commodity,  whicli 
maxinmm  prices  shall  be  ol)served  by  all  i)roducers  and  dealers  until  further 
action  tliereon  is  taken  by  the  commission. 

In  fixing  maximum  prices  for  producers  the  commission  shall  allow  the  cost 
of  production,  including  the  expense  of  operation,  maintenance,  depreciation, 
and  depletion,  and  shall  add  thereto  a  just  and  reasonable  profit. 

In  fixing  such  prices  for  dealers  the  commission  shall  allow  the  cost  to  the 
dealer  and  shall  add  thereto  a  just  and  reasonable  sum  for  his  profit  in  the 
transaction. 

The  maximum  prices  so  fixed  and  published  shall  not  be  construed  as  invali- 
dating any  contract  in  which  prices  are  fixed,  made  in  good  faith  prior  to  the 
establishment  and  publication  of  maxinunu  prices  by  the  commission. 

Whoever  shall,  with  knowledge  that  the  prices  of  any  such  commodity  have 
been  fixed  as  herein  provided,  ask,  demand,  or  receive  a  higher  price,  or  whoever 
shall,  with  knowledge  that  the  regulations  have  been  prescribed  as  herein  pro- 
vide(l.  violnte  or  refuse  to  coTiform  to  any  of  the  saine,  shall,  upon  conviction, 
be  punished  by  a  fine  of  not  more  than  .$.5,000,  or  by  imprisonment  for  not  more 
thiin  two  years,  or  both.  Each  independent  transaction  shall  constitute  a  sepa- 
rate offense. 

Nothing  in  this  section  shall  be  construed  as  restricting  or  modifying  in  any 
manner  the  right  the  Government  of  the  United  States  may  have  iu  it  own 
behalf  or  in  behalf  of  any  other  Government  at  war  with  Germany  to  purchase, 
requisition,  or  take  over  any  such  commodities  for  the  equipment,  maintenance, 
or  support  of  armed  forces  at  any  price  or  upon  any  terms  that  may  be  agreed 
upon  or  otherwise  lawfully  determined. 

The  Chairman.  The  committee  "will  come  to  order.  The  purpose 
of  this  hearing  is  to  consider  Senate  bill  2756,  which  is  inserted  in 
the  record. 

Notice  has  been  given  to  various  operators  in  steel  and  other 
products  of  this  hearing,  and  the  Federal  Trade  Commission  has 
also  been  requested  to  appear  by  its  representatives.  I  wish  to 
inquire  whether  there  are  any  representatives  of  corporations  or 
others  engaged  in  the  production,  sale,  or  distribution  of  iron  ore, 
iron,  steel,  and  other  products  present.  [After  a  pause.]  There 
seems  to  be  no  one  present  on  behalf  of  those  interests,  and  the  com- 
mittee will  now  proceed  to  hear  representatives  of  the  Federal  Trade 
Commission  in  regard  to  this  matt?r. 

Mr.  Davies,  will  you  be  good  enough  to  make  a  statement  regarding 
the  result  of  your  investigations  as  to  the  production,  sale,  and  dis- 
tribution of  iron  ore,  iron,  steel,  and  other  products?  We  will  first 
liear  the  statement  of  Commissioner  Davies. 

STATEMENT  OF  HON.  JOSEPH  E.   DAVIES.   COMMISSIONER 
FEDEKAL  TRADE  COMMISSION. 

Commissioner  Davies.  Mr.  Chairman,  Commissioner  Murdock  and 
myself  appear  for  the  commission.  Dr.  Walker,  our  chi?f  economist, 
and  Mr,  Wooster,  our  chief  accountant  on  steel,  also  appear,  as  does 
also  Mr.  Arthur  W.  Fairchild,  of  Milwaukee,  Wis.,  an  attorney  at 
law  who  is  acting  as  special  counsel  for  us.     ^Ir.  Fairchild  has  given 


8  PRICE   EEGULATION    OF   STEEL. 

the  form  of  this  legislation  considerable  thought  and  study  and  is 
also  familiar  with  our  investigations  of  the  steel  industry.  Mr.  Fair- 
child  is  a  law^'er  of  unusual  standing  and  ability  and  is  at  the  com- 
mand of  the  committee  to  make  any  examination  of  legal  authorities 
which  you  might  desire  in  this  connection. 

In  thinking  this  matter  over  it  occurred  that  it  might  be  of  some 
advantag?  to  the  committee  if  a  brief  statement  of  the  physical 
organization  of  the  steel  industry  were  first  made  as  a  preface  to  the 
statement  as  to  costs.  If  you  would  like  to  have  me  go  into  that 
matter  I  should  be  glad  to  do  so. 

The  Chairman.  The  committee  will  be  very  glad  to  hear  from  you. 

Commissioner  Davies.  The  basis  of  the  steel  industry  is  iron  ore. 
Iron  ore  is  produced  or  mined  principally  in  northern  Minnesota  and 
Michigan,  and  is  called  lake  ore,  and  in  Alabama  this  ore  is  called 
southern  ore.  There  are  other  fields  of  ore  scattered  over  the  United 
States,  but  they  are  relatively  small. 

The  oth?r  ingredients  of  pig  iron  are  coke  and  limestone.  The 
coke  is  produced  principally  in  three  districts — the  Connellsville  dis- 
trict of  Pennsylvania,  the  Pocahontas  district  in  the  Virginias,  and 
Birmingham  coke  in  Alabama.  Coke  is  produced  from  coal.  It 
takes  about  a  ton  and  a  half  of  coal  to  produce  a  ton  of  coke.  Pig 
iron  is  made  with  2  tons  of  northern  lake  iron  ore  to  1  ton  of  coke, 
with  some  limestone.  The  lake  iron  ore  is  brought  down  to  lower 
lake  ports,  so  called,  from  Minnesota,  shipped  by  freight  to  the  blast 
furnaces  in,  for  example,  the  valley  or  Pittsburgh  districts,  or  is 
produced  in  localities  adjacent  to  the  steel  companies  in  the  South. 

Iron  ore  and  coke  go  into  the  blast  furnace,  and  the  result  is  pig 
iron,  either  pig-iron  castings — which  is  ordinary  cast  iron — or  that 
which  is  the  gr?ater  part  goes  directly  into  the  manufacture  of  steel. 
The  principal  kinds  of  pig  iron  are  four:  Bessemer  pig  is  made  from 
low-phosphorus  ore  and  is  used  in  Bessemer  steel :  basic  pig  differs 
in  chemical  quality  and  constitutes  the  large  quantity  that  goes  into 
op?n-hearth  steel  production;  also  foundry  pig  and  malleable  pig  for 
castings. 

In  the  integrated  steel  plant  the  pig  iron  from  the  blast  furnace 
goes  direct  to  the  steel  furnace.  It  goes  either  to  the  Bessemer 
furnace  or  to  the  open-hearth  furnace.  The  great  bulk  of  the  pro- 
duction is  open  hearth.  The  open-hearth  process  takes  a  longer  time 
than  the  Bessemer,  and  pi'ockices  a  different  quality  of  steel. 

So  that  when  pig  iron  is  produced  you  either  have  it  in  the  form 
of  cold  ]-)ig.  in  which  event  it  is  sold  to  the  steel  companies,  which 
in  turn  melt  it  again  and  make  it  into  steel  by  the  Bess3mer  or 
open-hearth  process,  or  it  goes  hot  to  the  steel  works,  where  the  two 
processes  are  owned  by  the  same  organization.  The  pig  iron  and 
scrap  come  out  of  the  steel  works  in  the  form  of  ingots.  The  ingot 
is  poured  out  into  containers,  which  are  generally  upon  moving 
platforms  or  cars.  It  then  goes  through  the  solidifying  process  and 
goes  hot  to  the  rollino-  mill  where  it  is  converted  into  either  slabs, 
blooms,  or  billets — slabs  beiug  further  rolled  into  plates,  and  blooms 
beirg  further  used  to  produce  shapes,  rails,  etc. 

The  total  production  of  pig  iron  in  the  country  is  approximately 
4a.000,000  tons;  of  steel  ingots,  approximately  43,000.000  tons.  The 
43,000,000  tons  of  ingot  steel  is  used  about  as  follows:  Approxi- 
mately 10,000,000  is  wastage  and  is  reused  later  on:  3,200,000  tons 


PKICE   REGULATION   OF   STEEL.  9 

go  into  shapes;  5,400,000  tons  go  into  plates;  approximately 
10,000,000  tons  go  into  bar-mill  products,  rods,  and  the  like;  2,000,000 
tons  go  into  black  sheets  so  called ;  2,400,000  go  into  galvanized  slieets, 
and  the  remainder  goes  into  other  finished  products. 

The  number  of  blast  furnaces  in  the  country  is  approximately 
400.  In  the  steel  industry,  generally  speaking,  there  aie  four  classes 
of  producers  of  steel.  The  classes  are  based  on  the  degree  of  integra- 
tion of  the  processes  of  manufacture.  There  is  one  class  that  owns 
its  iron  ore;  in  some  degree  its  transportation  facilities,  railroads 
in  the  mining  region,  boats  on  the  Great  Lakes;  its  blast  furnaces, 
which  produce  its  pig,  its  <;oke  requirements,  and  its  rolling  mills. 
So  it  is  completely  integrated  from  ownership  of  the  ore  through 
to  the  final  production  of  the  product.  This  class  produces  steel,  of 
course,  more  cheaply  than  any  of  the  others.  The  next  class  is  the 
class  that  has  to  buy  in  large  part  their  iron  ore  and  their  coke,  so 
that  this  class  loses  profits  in  the  process  Avhich  the  first  class  gets 
on  the  production  of  iron  ore  and  the  production  of  coke,  and  has 
to  pay  this  profit  in  the  price  of  this  material.  Its  costs  figure  up . 
to  that  degree  higher.  Then  there  is  the  third  class  that  buys  in 
large  part  its  pig  iron  and  starts  its  manufacturing  process  with 
the  steel  works.  Its  costs  are  still  higher.  Of  course  you  can  readily 
see  that  if  class  one,  for  instance — the  most  highly  integrated  class — 
can  produce  pig  iron  at,  say,  for  instance,  $16  or  $18  a  ton,  it  is  in  a 
position  where  it  can  make  steel  much  cheaper  than  the  class  that 
has  to  buy  its  pig  iron  at  a  $35-contract  price,  or  possibly  the  $50 
or  $54  market  price,  which  now  obtains. 

Class  4  is  the  class  that  buys  its  steel  billets  or  steel  ingots  and 
rolls  plates  and  shapes  or  other  products  out  of  the  steel  that  it  buys. 
It  has  the  highest  costs  of  the  four. 

CENTRALIZATION   IN   STEEL  INDUSTRY. 

Another  fact  that  we  find  in  the  steel  industry  that  is  different 
from  many  ether  industries  is  that  it  is  probably  one  of  the  most 
highly  centralized  of  all  industries  in  the  country.  As  I  stated,  the 
total  capacity  of  the  country  in  pig  iron  is  approximately  40.000,000 
tons.  Seventy  per  cent  of  all  that  pig  iron  is  produced  by  29  com- 
panies in  the  United  States.  The  number  of  companies  making  steel 
ingots — which  I  stated  had  a  total  capacity  of  43.000,000  tons  in  the 
entire  country — is  about  200.  Eighty-two  per  cent  of  all  the  steel 
ingots  protluced  are  produced  by  21  companies  in  the  ITnited  States. 

SHIPS   AND   STEEL    CONSTRUCTION. 

Steel  ships  are  made  out  of  steel  shapes  and  steel  plates.  A  steel 
ship  is  really  a  steel  box.  The  shapes  are  the  heavy  steel  that  go  to 
make  the  structure,  and  the  plates  make  the  sides,  and  about  30  per 
cent  of  the  steel  used  in  the  ship  is  the  heavier  structural  steel; 
70  per  cent  plates. 

Of  the  total  of  steel  shai)i'S  produced  in  the  United  States  approxi- 
mately 81)  per  cent  is  produced  by  five  companies.  Of  the  steel  plates 
produced  in  the  United  States  92  per  cent  is  produced  by  18  com- 
panies, and  of  bar-mill  products  62  per  cent  of  the  total  is  produced 
by  eight  companies,  so  that  the  industry  is  centralized  to  a  very 


10  PRICE   REGULATION   OF   STEEL. 

remarkable  degree  in  the  hands  of  a  very  few  companies.  To  that 
extent,  of  course,  it  might  be  more  easily  subject  to  central  Govern- 
ment control  or  regulation. 

There  are  6,000  coal  mines  in  the  United  States.  There  are  200 
steel  companies,  and  of  plates  and  shapes  practically  75  per  cent  of 
the  production  is  produced  by  from  five  to  eight  companies  in  the 
United  States. 

PRICE  HISTORY. 

Price  history  in  the  steel  industry  is  interesting.  The  price  of  iron 
ore  at  the  lower  lake  ports — which  is  the  basic  price  which  is  gen- 
erally taken  in  market  quotations — varied  for  northern  lake  ore  from 
i895  to  1911  as  follows:  An  average  of  about  $2.40  in  1895;  an  aver- 
age of  about  ^3  in  1896 ;  an  average  of  about  $2.25  in  1897 ;  an  average 
of  about  $2.25  in  1898;  an  average  of  about  $2.50  in  1899;  an  average 
of  about  $4.50  in  1900;  an  average  of  about  $3  in  1901;  an  average 
of  about  $2.75  or  $3.50  in  1902;  about  $4  in  1903;  about  $2.80  in 
1904;  about  $3  in  1905;  about  $3.75  in  1906;  about  $4.50  in  1907; 
about  $3.75  in  1908;  about  the  same  in  1909;  about  $4.50  in  1910; 
and  about  $3.75  in  1911. 

These  are  fairly  typical  of  the  prices  of  ore  at  the  lower  lake  ports. 

Senator  Cummixs.  That  is,  for  Michigan  and  Minnesota  ore? 

Commissioner  Davies.  For  Michigan  and  Minnesota  ore ;  yes.  As 
to  coke  prices,  I  have  tables  here  which  I  will  be  glad  to  submit  for 
the  purposes  of  the  record,  which  show  Connellsville  coke  for  fur- 
nace delivery  from  1901  to  1914,  ranging  from  a  minimum  of,  we 
will  say,  approximately  $1.40  a  ton  to  a  maximum  during  the  period 
of  14  years  of  possibly  $5  or  $6  a  ton,  and  which  occurred  only  in 
1902  for  three  months. 

Senator  Pomereme.  Your  prices  are  at  the  ovens,  I  take  it. 

Commissioner  Davies.  Yes,  sir.  A  fairer  high  average  would  be 
probably  $2.75  or  $3. 

The  Chairman.  Has  this  increase  been  a  gradual  one? 

Commissioner  Davies.  I  Avas  just  getting  to  that,  Mr.  Chairman. 
For  a  period  of  about  14  years  prior  to  1915  the  price  of  coke,  except 
for  a  short  time  during  the  anthracite  strike,  did  not  exceed  $3  and 
was  much  less  than  this  generally. 

We  find,  as  to  coke,  pig  iron,  billets,  shapes,  and  beams,  one  com- 
mon fact  as  to  price.  Prices  remained  about  normal,  or  j^erhaps  in 
1913  or  1914  a  little  below  normal,  up  to  about  the  middle  of  1915. 
When  the  war  broke,  the  industry  did  not  seem  to  know  "  where 
it  was  at.''  and  prices  were  perhaps  a  little  below  normal.  But  the 
price  started  on  its  ascent  quite  uniformly  in  August  and  September 
of  1915  and  went  up  very  rapidly.  Connellsville  coke,  the  price  for 
prompt  shipment  being  in  August  about  $1.50,  bv  February,  1916. 
had  reached  $3.38;  by  October,  1916,  had  reached  $4.88 ;  and  by  De- 
cember had  reached  $8.38.  Tn  August  of  this  year  it  reached  $16. 
The  increase  occurred  between  August.  1915.  and  August,  1917. 

The  Chairman.  What  was  the  unit  of  coke? 

Commissioner  Davies.  Per  ton,  net  ton.  The  present  price  of 
Connellsville  coke  for  prompt  shipment  is  $13.  It  has  fallen  since 
August. 

Senator  Cummins.  That  increase  in  price  began  in  1913? 

Commissioner  Davies.  About  August,  1915. 


PRICE   REGULATION    OF   STEEL.  11 

Senator  Cummins.  The  year  after  the  war? 

Commissioner  Davies.  Yes;  and  it  began  quite  uniformly  as  to 
all  steel  products  at  that  time.  Bessemer  pig  iron,  Pittsburgh,  per 
gross  ton,  the  price  of  which  ranged  from  as  low  as  $10  to  as  high 
as 

Senator  Pomekexe.  Of  what  time  are  you  speaking? 

Connnissioner  Davies.  $10  in  1898.  I  might  read  the  average  of 
prices  for  each  year  in  order  to  give  you  an  idea  of  the  conditions: 
In  1808,  about  $10;  1899,  about  from  $11  to  $24;  1900,  from  $13  to 
$21  a  ton ;  1901,  from  $13  to  $16 ;  1902,  from  $16  to  $21.75 ;  1903.  from 
$14  to  $21 ;  1904,  from  $12.40  to  $16 ;  190o,  from  $14  to  $18 :  1906,  from 
$18  to  $23;  1907.  from  $19  to  $23:  1908,  from  $15  to  $19;'  1909.  from 
$15  to  $19 ;  1910,  from  $15  to  $20.  In  1911  it  is  interesting  to  know  that 
the  uniform  price  all  through  the  year  for  the  first  nine  months  was 
$15.90  lor  ever}^  month.  The  market  was  very  stable  for  some  rea- 
son or  other.  In  1912,  from  $14.90  to  $18;  1913,  from  $15  to  $17; 
1914,  $14.06  to  $14.90.  So  that  all  during  the  year  of  1914  the  price 
of  pig  iron,  Bessemer  pig  at  Pittsburgh,  was  between  $14.59  and 
$15.09. 

Senator  Cummins.  You  have  given  in  each  of  those  years  the  low- 
est and  highest  prices? 

Commissioner  Davies.  The  market  quotations. 

Senator  Cummins.  Have  j'ou  in  the  average  prices  for  those  years 
taken  into  account  the  amount  sold  at  each  price? 

Commissioner  Davies.  For  some  years;  yes,  sir.  I  will  take  this 
up  later.  The  price  for  pig  iron  remained  at  about  $14.95  until 
August,  1915,  when  the  price  started  up,  and  it  went  from  $14.95  in 
July  to  $19  in  December;  to  $22  by  August,  1916;  $35  in  December, 
1916 ;  and  went  to  as  high  as  $58  this  year,  and  is  now  about  $52 ;  so 
that  in  18  months  the  price  of  pig  iron  went  from  $14.60  to  about  $52 
to  $58. 

With  reference  to  pig  iron,  it  may  be  stated  that  for  30  years  not 
to  exceed  three  times  perhaps  did  the  price  of  pig  go  up  to  $25.  and 
rarely  went  over  $20.  That  will  give  you  some  measure  of  the 
advance  in  price  from  August,  1915,  to  August,  1917. 

Billets  started  in  August,  1915,  at  about  $23,  and  in  November,. 
1916,  had  gotten  up  as  high  as  $52.  Tlu  prevailing  price  for  billets 
seemed  to  range  from  1901  from  $20  to  $28  or  $30  maximum.  All 
during  the  year  1914  the  price  of  billets,  Bessemer  steel  at  Pittsburgh, 
was  from  $19  to  $21  and  remained  at  $20  until  August,  1915,  and 
went  to  $57.50  in  December,  1916. 

Senator  Cummins.  That  covers  your  investigation  in  the  vear 
1916?     • 

Commissioner  Davies.  No,  sir.  I  am  now  discussing  the  rise  of 
prices.  We  have  since  made  investigation  of  1916  costs  and  price 
and  1917  costs  and  price,  and  the  Bureau  of  Corporations  made 
studies  in  1902  and  1906  and  also  in  1910 — the  costs  and  prices  in 
1910 — which  I  will  discuss  later.  Commissioner  Murdock  has  just 
stated  to  me  that  in  August  of  this  y;  ar  billets  went  up  to  $100  in 
contrast  with  the  price  that  obtained  of  $20  in  1914. 

Plates  in  1914  ranged  from  $1.05  to  $1.20  per  hundredweight, 
tank  plates  at  Pittsburgh,  and  to  $4.25  per  hundred  weight  in  No- 
vember, 1916,  have  since  gone  very  much  higher,  and  I  think  are  now 


12  PEICE   REGULATION    OF    STEEL. 

in  the  neighborhood  of  $T  or  $8.  Thev  reached  $9  in  JUI3'  of  this 
year  in  contrast  to  $1.20  in  1914. 

The  steel  plates  which  were  crdinarily  sold  at  from  $1.06  to  $2.40 
have  been  sold  apparently  as  high  as  $11  a  hundredweight,  which 
would  be  in  th?  neighborhood  of  $260  a  ton.  and  we  have  heard  of 
some  offers  being  made  for  steel  plates  at  17  cents,  which  is  pretty 
nearly  eight  times  the  prevailing  price  that  obtained  in  1914. 

Senator  PoMERENE.  Illuminate  that  one  point,  although  perhaps 
yon  are  going  into  it  later  on.  Have  you  figures  showing  the  increase 
in  labor  costs  during  those  years?  AYe  have  had  pointed  out  the 
price  of  sheets  and  plat-^s,  or  rather  plates,  and  in  that  connection 
it  might  be  interesting  to  have  you  state  what  the  increase  in  the 
labor  cost  was? 

Commissioner  Davies.  I  can  not  take  it  up  at  this  point.  I  would 
a  little  prefer  to  take  it  up  later. 

Senator  Pomerene.  Verv  well;  I  would  prefer  to  have  you  do  so. 

Commissioner  Davies.  What  I  am  trying  to  develop  now  for  your 
information  is  the  verv  remarkable  increase  in  prices  in  a  verj'^  short 
period  of  time  as  to  all  of  these  materials. 

Senator  Cummixs.  In  stating  the  cost  of  steel  plates,  do  you  use 
the  long  or  short  ton  ? 

CAT7SES    FOR    ADVANCE    IN    PRICES. 

Commissioner  Davies.  The  charts  are  based  on  the  long  ton.  The 
causes  for  this  very  remarkable  advance  in  prices  we  believe  to  be 
two  at  least.  In  the  first  place,  there  has  been  very  marked  increases 
in  costs.  Wages  have  increased,  and  I  noticed  in  the  morning  paper 
that  the  United  States  Steel  Corporation  has  made  another  addi- 
tional 10  per  cent  wage  advance  for  all  of  its  employees.  It  has  been 
stated,  and  I  think  it  is  sustained  by  the  judgment  of  our  experts, 
that  a  10  per  cent  wage  advance  bv  the  United  States  Steel  Corpora- 
tion means  the  increase  in  cost  of  steel  on  heavy  products  of  about 
$1.50  a  ton.  Wage  advances  have  been  as  high  as  40  or  50  per  cent 
during  the  last  two  or  three  years.  So  if  there  have  been  four  in- 
creases of  10  per  cent  by.  to  illustrate,  the  United  States  Steel  Co.. 
the  increase  in  cost  of  steel  to  the  United  States  Steel  Co.  would 
be  about  $6  by  that  increase. 

Senator  Cummins.  $6  a  ton? 

Commissioner  Da  vies.  Yes.    That  is  correct. 

Senator  Cummins.  Before  you  go  into  the  question  of  cost,  there 
is  one  prominent  form  of  steel  that  you  have  not  mentioned,  namely, 
steel  rails.  There  is  a  very  peculiar  phenomenon,  I  think,  with  re- 
gard to  that  product.  Can  you  state  the  price  of  steel  rails  during 
this  time? 

Commissioner  Davies.  The  present  price  of  steel  rails.  I  think,  is 
about  $72  for  light  section  rails. 

Senator  Cummins.  Will  you  please  give  the  gradual  rise  in  price  of 
steel  rails? 

Commissioner  Davies.  The  present  price  of  steel  rails  is  about  $75. 
Mr.  AVooster  and  Dr.  Walker  suggest  that  this  chart  will  show  what 
the  rise  in  steel  rails  has  been.  The  price  of  steel  rails  shows  no  fluc- 
tuation from  1900  to  about  March,  1916:  the  uniform  price  was  $28. 
In  March,  1916,  it  started  up  and  by  July  had  reached  the  price  of 


PBIOE  REGULATION   OF   STEEL.  13- 

$33,  and  by  November,  1916,  it  reached  the  price  of  $38.    I  understand 
the  prevailing  price  for  light  rails  is  $75;  for  heavy  rails  about  $12. 

Senator  Pomerene.  I  have  the  quotations  here  taken  from  Brad- 
street.  From  January  on  until  June  2  the  prevailing  price  was  $40 
a  ton  and  June  23,  $41  a  ton.    That  is  as  it  is  furnished  me. 

Senator  Cummins.  For  what  year? 

Senator  Pomereke.  The  present  year. 

The  Chairman.  1917? 

Senator  Pomerene.  Yes. 

The  Chairman.  I  have  never  heard  of  the  price  being  over  $42  for 
steel  rails.    During  what  time  has  the  price  of  $75  per  ton  prevailed? 

Commissioner  Davies.  I  think  the  current  market  price  is  $75» 
That  price  is  for  light  rails.    You  are  right  as  to  heavy  rails. 

The  Chairman.  Has  it  only  recently  gone  to  that  figure? 

Commissioner  Davies.  In  December,  1916,  the  price  was  $38. 

Senator  Cummins.  I  do  not  know  what  the  price  at  this  moment  is» 
but  I  have  been  informed  that  until  the  middle  of  the  present  year  the 
price  has  not  been  above  $41  per  ton.    I  am  not  sure  about  that. 

Commissioner  Davies.  We  can  ascertain  that  for  you,  Senator. 

Senator  Cummins.  Can  you  give  me  the  same  information  with 
regard  to  the  price  of  structural  steel,  not  fabricated  any  further  than 
punching?  They  turn  out  two  kinds  of  structural  steel,  one  fully 
fabricated  and  put  up,  riveted,  etc.,  while  other  forms  are  simply 
punched  read}^  for  the  contractor  when  he  comes  to  put  up  the  steel 
in  the  building.     Have  you  the  prices  of  those  forms  of  steel? 

Commissioner  Davies.  We  may  have  those,  Senator.  AVe  have 
confined  ourselves  pretty  closely  for  immediate  purposes  to  the  basic 
materials,  such  as  ore,  coke,  pig  iron,  ingots,  plates,  and  shapes.  Now, 
we  have  a  large  amount  of  material  in  addition  to  that,  but  it  has 
not  been  brought  together.  Such  information  as  we  have,  or  that  we 
can  get,  will  be  furnished  for  the  record,  if  you  desire  it. 

Senator  Cummins.  I  see  there  is  a  table  here  which  gives  the  price 
of  beams.  I  do  not  know  whether  it  assumes  that  they  are  simply- 
rolled  or  whether  it  assumes  that  they  are  further  fabricated.  It 
begins  with  $100  in  January,  1898,  and  ends  with  $3.25  in  December^ 
1916.     Probably  that  is  sufficient  to  satisfy  my  mind  on  that  point. 

Dr.  Walker.  It  is  unfabricated  steel. 

Senator  Cummins.  Yes;  that  is  unfabricated  steel.  Pardon  me 
for  interrupting  you ;  you  were  going  into  the  matter  of  costs. 

Commissioner  Davies.  It  occurred  to  me  that  you  would  like  to 
have  our  judgment  as  to  the  reason  for  this  remarkable  increase  in 
price.  As  I  have  stated,  there  have  been  some  remai-kable  increases 
in  costs,  but  of  course  those  increases  in  cost  have  been  very  much 
smaller  relatively  and  absolutely  than  increases  in  price.  The  second 
principal  reason,  as  we  view  it.  is  the  fact  that  there  has  been  a  tre- 
medous  demand  for  steel,  and  the  supply  of  steel  relatively  is  limited, 
and  it  takes  time  to  build  steel  plants.  The  production  has  been 
increased  or  will  be  increased  probably  500.000,000  as  to  sheets  and 
plates  by  the  first  of  this  year,  but  generally  speaking  the  available 
supply  is  constant  and  the  demand  has  been  tremendous.  For  in- 
stance, a  vast  amount  of  shipping  has  been  destroyed,  as  we  know, 
and  there  is  a  great  demand  for  steel  both  for  the  allies  and  for  our 
own  uses.     The  Government's  demand  for  steel,  I  understand,  will 


14  PRICE   REGULATION    OF   STEEL. 

be  in  the  nighborhood  of  from  4,000,000  to  6,000,000  tons.  That  in- 
crease takes  out  of  the  available  siipplj'^  for  industrial  and  commer- 
cial uses  a  very  much  larger  factor  than  has  ever  been  taken  out 
before.  That  reduces  the  amount  that  will  be  available  for  domestic 
and  private  consumption. 

Senator  Pomereme.  Have  you  in 'mind  what  was  the  normal  con- 
sumption of  steel  by  the  Government  prior  to  this  year? 

Commissioner  Davies.  I  do  not  know,  but  I  should  say  it  was 
not  one-fifth  of  the  present  consumption.  I  think  that  is  a  conserva- 
tive estimate,  but  I  can  ascertain  that,  roughly  speaking,  I  should 
say  not  nearly  one-fifth. 

The  Chairman.  As  these  prices  have  advanced  I  imagine  the  use 
of  steel  for  industrial  and  domestic  purposes  has  diminished  whilst 
the  governmental  use  has  increased.     Is  that  not  a  fact? 

Commissioner  Davies.  That  would  be  so.  Senator,  provided  the  de- 
mand were  a  constant  and  normal  demand  and  not  an  increasing 
demand,  but  I  do  not  think  it  is  so  in  the  present  condition.  The 
commercial  and  industrial  world  have  never  experienced  such  de- 
mands for  their  production  as  now.  There  has  never  been  such  a 
demand  for  steel  as  within  the  last  two  years,  and  the  demand  is 
such  that  it  takes  absolutely  no  cognizance  of  price ;  that  is  to  say,  if 
a  man  has  a  contract  which  he  is  obliged  to  meet,  and  if  he  has  a 
large  force  of  men.  2,500.  we  will  say,  and  an  organization  which  it 
has  taken  him  years  to  build  up,  he  has  to  have  steel  in  order  to  have 
his  plant  going  and  to  keep  his  organization  from  being  disrupted 
and  scattered.  So  he  asks  for  steel,  and  he  says  the  price  is  a  sec- 
ondary consideration  with  him.  What  he  wants  is  steel.  The  result 
is  that  the  price  of  the  commodity  bears  no  relation  whatsoever  to  the 
cost  of  its  production,  and  prices  have  gone  up  on  steel,  not  so  much 
because  the  producers  have  exacted  a  high  price  for  their  product, 
perhaps,  as  the  fact  that  the  buyers  are  competing  with  each  other 
for  the  sam^  production,  and  if  there  are  six  or  eight  buyers  for  one 
commodity  and  they  can  not  get  it  any  place  else,  they  will  big 
•against  each  other  and  bid  the  price  up.  So  that  the  market,  so  far 
as  the  price  of  steel  is  concerned,  has  been  a  runaway  market,  so  to 
speak. 

In  our  judgment,  that  is  one  of  the  big  factors  in  the  increase,  or 
one  of  the  principal  reasons  for  the  increase  of  price  of  steel  pro- 
duction. 

Senator  Cummins.  In  speaking  of  the  governmental  demand  for 
steel  during  the  last  year,  do  you  mean  to  include  the  foreign  demand 
as  well  as  the  domestic  demand — I  mean  the  demand  of  the  foreign 
governments  as  well  as  our  own? 

Commissioner  Davies.  I  was  advised  as  long  ago  as  10  weeks  that 
the  demands  of  the  Government  were  three  and  one-half  million. 

Senator  Cummins.  That  was  our  Government? 

Commisisoner  Davies.  Yes,  sir;  and  in  conference  with  the  War 
Industries  Board,  Judge  Lovett,  Mr.  Brookings,  and  Mr.  Baruch, 
on  Monday  last,  it  was  stated  by  Mr.  Eepfogle,  who  was  handling 
steel  for  ]Mr.  Baruch.  that  the  total  of  requirements  would  be  in  the 
neighborhood  of  five  to  six  million  tons,  and  I  do  not  know  whether 
that  included  the  requirements  of  the  allies  or  not,  but  my  judgment 
is  that  it  did.    As  to  that  I  would  not  be  definite. 


PRICE   EEGULATION    OF    STEEL.  15 

Senator  Cummixs.  Did  you  state  the  Government  capacity  with 
production  ? 

Commissioner  Da  vies.  Yes,  sir ;  I  stated  that  the  total  capacity  for 
steel  ingots  was  about  40,000,000  tons. 

Senator  Cummins.  What  is  the  capacity  at  this  time  as  compared 
with  the  capacity  a  year  ago  or  two  years  ago? 

Commissioner  Davies.  I  think  the  capacity  has  been  somewhat  ex- 
tended, Senator,  but  I  understand  that  of  that  character  of  steel 
which  the  Government  needs  principally,  which  is  sheets  and  plates, 
that  it  has  increased  about  500,000  tons  up  to  the  1st  of  January. 

Senator  Cummins.  But  the  kind  of  steel  that  the  people  use  gen- 
erally, with  respect  to  that,  it  has  increased  much  more,  has  it  not? 

Commissioner  Davies.  The  capacity  has  increased. 

Senator  Cummins.  Yes,  sir. 

Commissioner  Davies.  I  doubt  very  much  whether  the  capacity 
has  increased  substantially,  because  it  takes  time  to  put  up  the  plants. 
Tt  has  increased,  birt.  relatively.  1  do  not  think  it  is  a  very  large 
increase.  The  amount  of  steel  that  is  produced  for  shapes.  T  iliink, 
is  about  3,200,000  tons,  and  the  amount  for  plates  about  5,800,000  tons, 
so  to  take  production  of  steel  for  plates  and  shapes  is  about  S.OUU.UOO, 
and  the  principal  requirements  of  the  Government  come  from  tluit 
character  of  production,  so  that  the  ratio  of  6  to  40  does  not  iide- 
quately  show"  the  degree  to  which  the  Government  invasion  of  the 
market  will  a  fleet  the  market  as  to  private  consumers,  but,  rather,  it 
would  be  the  ratio  of  G  to  12  or  18.  In  other  words,  the  amount  taken 
out,  ('»,(JOO,000  tons,  will  afl'ect  the  market  very  substantially  as  to  the 
requirement  of  ordinary  industry,  because  it  is  the  same  class  ol  steel 
they  largely  use. 

Senator  Cummins.  Has  this  increase  in  the  demand  for  shapes, 
forms,  and  plates,  and  the  like,  has  that  diminished  the  capacity  of 
the  mills  for  the  production  of  structural  steel  for  building,  for  bar?, 
for  merchants,  and  for  rods  and  nails,  and  the  like  of  that  ? 

Commissioner  Davies.  It  has,  in  this  way,  that  in  order  to  get  the 
-teel  for  plates  and  shapes  which  the  Xavy  and  the  Shipping  Board 
will  require  it  Avill  be  necessary  to  take  steel  that  would  ordinarily 
be  used  in  bridge  construction,  building  construction,  and  that  cbss 
of  products  that  you  have  described  in  order  to  supply  the  needs  of 
the  Government  for  ship  building  and  the  needs  of  industry  for  shell 
steel,  and  for  those  things  which  have  a  greater  priority  claim  than, 
for  instance,  the  construction  of  buildings  would  have. 

Senator  Cummins.  That  is,  they  have  not  enough  iron  ore  to  sup- 
ply the  entire  demand? 

Commissioner  Davies.  They  can  not  produce  enough  steel  to  sup- 
ply the  entire  demand. 

Senator  Cu3imins.  You  mean  the  blast  furnaces  are  inadequate  or 
the  mines  are  insufficient  ? 

Commisisoner  Davies.  The  blast  furnaces  and  the  steel-rollmg 
mills  are  being  put  up  as  rapidly  as  they  can  be,  I  believe,  but  it  takes 
time  to  get  them  going  and  to  get  their  plants  organized.  I  think  it 
should  be  stated,  in  fairness,  that  they  are  having  tfouble  with  labor 
also.  They  claim  that  their  labor  is  less  efficient  than  it  was — thac  a 
great  many  of  their  men  are  being  taken  away. 


16  PRICE   REGULATION    OF    STEEL. 

The  Chairman.  Have  yon  any  idea  of  what  additional  amounis 
of  capital  have  been  put  into  plants  for  the  production  of  steel  and 
pig  iron  during  the  period  of  the  war? 

Commisisoner  Da  vies.  I  know  that  about  500,000  tons  additional 
capacity  for  plates  and  shapes  have  been  put  up.  and  that  the  invest 
ment  required,  in  my  judgment,  would  be  in  the  neighborhood  ol 
$15,000,000  for  that  production,  and.  I  dare  say,  a  great  deal  mori' 
construction  than  that  represents  has  been  started. 

To  conclude,  the  fact  is  that  the  price  situation  that  we  are  now 
confronting  is  due  to  competitive  buying  and.  in  some  measure,  to 
increase  of  cost,  and  those  increases  are  proceeding  month  by  month. 
The  last  costs  that  we  had  were  in  June.  1917.  The  costs  increased 
every  month  from  January,  1917.  up,  and  the  costs  now,  in  August, 
are  undoubtedly  higher  than  the  costs  in  June.  For  instance,  pig 
iron  for  the  United  States  Steel  Corporation  in  1917  cost  $l.--*7  more 
than  in  1910;  shapes  in  May  cost  $5  more  than  in  1916;  plates  $8 
more  than  in  191G. 

There  have  been  increases  in  costs  in  labor,  but  these  costs  repre- 
sent only  in  part  the  reasons  for  the  increases  in  costs.  Each  class 
above  the  highest  integrated  class  buys  its  raw  material,  ore.  coke, 
pig  iron,  or  steel  at  great  advances,  and  the  company  that  buys  its  pig 
iron  at  $35  or  $50  a  ton  finds  a  great  advance  in  the  costs  of  its  steel. 
The  high  cost  of  basic  materials  is  translated  into  higher  costs  in  the 
final  finished  product.  The  increases  in  costs  have  neither  absolutely 
nor  relatively  been  anywhere  near  commensurate  with  increase  of 
price,  and  you  can  not  account  for  the  increase  in  price  by  the  in- 
crease in  cost,  and  you  must  account  for  the  increase  in  price  in  part, 
at  least,  because  of  the  competitive  buying  in  the  market. 

Senator  Cummins.  Mr.  Davis,  I  do  not  Avant  to  disturb  the  order 
of  your  argument — I  mean  the  scheme  that  you  have  in  mind — but 
if  at  some  time  you  could  take  a  fully  integrated  company,  the  United 
States  Steel  Corporation,  for  example,  and  begin  with  the  iron  ore, 
not  counting  the  value  of  the  ore  in  the  ground,  but  begin  with  the 
production  of  the  ore.  and  state  what  added  cost  there  is  in  taking 
ore  from  the  ground  and  putting  it  on  the  docks  at  Lake  ports,  and 
transporting  it  to  the  blast  furnaces,  so  that  we  would  know  the  in- 
crease in  cost  of  a  ton  of  pig  iron  to  that  company,  and  then  follow 
that  pig  iron  through  the  various  forms  that  it  takes  in  manufacture. 
it  would  give  me  a  very  comprehensive  as  well  as  a  logical  conception 
of  what  the  added  costs  have  been  and  what  their  effect  ought  to  be 
in  the  price. 

Commis'-ioner  Davies.  I  was  just  coming,  Senator,  to  the  costs 
along  that  line,  but  I  will  be  very  glad  to  answer  your  question  now. 

Senator  Cummins.  That  would  be  simply  to  take  up  the  first  class 
of  producers  which  you  gave  and  follow  its  operations  through. 

Commissioner  Davies.  Suppose  I  give  you  this;  I  think  it  will  an- 
swer your  idea : 

If  coal  costs,  we  will  say,  $2.  the  conversion  cost  of  that  coal  into 
coke  would  probably  be  $1.25 ;  the  oven  profit  on  coke  would  probably 
be  25  or  50  cents,«including  overhead;  that  would  make  the  coke  at 
the  oven 

Senator  Cummins.  It  would  cost  approximately  $5  a  ton  on  the 
present  standards? 


PRICE   REGULATION    OF    STEEL.  17 

Commissioner  Dames.  That  is,  under  average  prices  that  have  (jb- 
tained  heretofore,  yes;  practically  on  present  standards.  Then  if 
you  were  to  take  the  iron  ore  and  freight  to  the  northern  Lake  ports 
and  add  the  freight  down  the  Lakes  to  lower  Lake  ports,  and  add 
freight  to  the  furnace  and  take  the  regular  market  cjuotations  for 
ore  and  say  that  ore  under,  present  conditions  could  be  (juoted  at  $5 
at  lower  Lake  ports,  then  the  cost  of  A^our  iron  ore  in  your  pig  iron 
would  be  $10,  two  times  five — that  is.  two  tons  of  the  pig  to  one  ton 
of  coke,  to  which  freight  to  the  furnace  would  have  to  be  added. 

Senator  Cummins.  That  would  be  the  cost  of  the  material? 

Commisioner  Davies.  Two  tons  of  ore  and  one  ton  of  coke;  so 
your  pig  iron  would  be  made  up  of  two  tons  of  ore  at  $5.  which  would 
be  $10.  one  ton  of  coke  at  $5.  which  would  make  the  total  $1;").  and 
then  your  freight  on  your  coke  and  ore  to  the  bhist  furnace  would  be 
about  $2.75  to  $3,  your  limestone  al)out  60  cents,  and  your  cost  above 
probably  $2.  Avhich  would  bring  the  total  cost  of  the  pig  iron  to 
about  $i9  or  $20  a  ton.  Then  you  would  add  to  that  your  profit  per 
ton  in  order  to  get  your  profit  on  investment. 

That  is  not  the  integrated  concern.  But  suppose  that  a  concern 
has  to  buy  iron  ore  under  those  conditions,  it  would  produce  pig  iron 
at  from  $19  to  $23  a  ton ;  and  on  that  basis  would  get  its  pig  iron  at 
that  price  instead  of  having  to  l)uy  it  at  $52,  the  market  price. 

Xow.  to  the  integrated  concern  the  cost  of  pig  iron  would  be  about 
$1G  a  ton.  That  is,  the  saving  it  would  make  by  profit  on  intercom- 
pany profits  would  l)e  about  that  difference.  If  you  take  out  inter- 
company profits  from  your  book  cost  of  $16  a  ton  for  pig  iron,  you 
would  reduce  their  costs  to  approximately  $12  a  ton,  so  that  the  in- 
tegrated concern  that  owns  its  ore,  that  owns  each  stage  in  the  pro- 
cess up  to  the  manufacture  of  the  pig,  could  make  the  pig  iron  at  a 
net  cost  of  about  $12  a  ton,  whereas  the  concern  that  had  to  buy  its 
ore  and  buy  its  coke  and  pav  its  freight  at  these  prices  will  be  paying 
about  $25  a  ton.     Does  that  answer  you  \ 

Senator  Cummins.  Partly,  although  not  quite  as  much  in  detail  as 
I  would  want.  Take  this  company,  what  is  the  ore  costing  it  when 
it  loads  it  on  the  car  at  the  mine  per  ton  at  the  same  time  giving 
allowances  for  the  increases  in  labor?  What  does  a  ton  of  ore  cost 
the  United  States  Steel  Co.  on  its  cars  or  on  the  cars  of  the  railroad 
company  which  it  owns  at  the  mine  ? 

Commissioner  Davies.  The  Bureau  of  Corporations  made  an  in- 
vestigation covering  1902-1006  of  the  cost  of  ore  at  the  mine,  cost 
of  transportation,  cost  of  lower  Lake  ports,  and  here  are  the  aver- 
ages for  all  of  the  lower  Lake  prices  at  that  time,  and  that  covei-.s 
practically  the  United  States  Steel. 

Senator  Cummins.  That  does  not  include  the  increases  in  laboi" 
since  that  time  ? 

Commissioner  Davies.  Xo;  but  I  can  give  you  those  later. 

Commissioner  JNIuhdock.  I  think  it  would  clarify  this  some  if  Mr. 
Davies  understood  just  what  Senator  (^ummins  is  seeking  to  develop. 
You  are  speaking  of  conversion  cost.  Senator,  is  that  it? 

Senator  Cummins.  Yes;  I  Avant  to  know  what  it  costs  at  the 
present  time  one  of  these  fully  organized  companies — integrated  com- 
panies,  as   Mr.    Davies   called    them — to    produce   steel    in    various 

14774— 17— PT  1 2 


18  PEICE  REGULATION    OP   STEEL. 

forms.  I  suggest  beginning  at  the  mine  and  coming  doAvn  to  the 
final  form. 

Commissioner  Mukdock.  With  a  detailed  showing  of  each  con- 
version cost  from  one  step  to  the  other? 

Senator  Cummins.  AVith  each  conversion  cost.  It  probably  is  in 
greater  detail  than  you  have  prepared  yourself  to  give. 

Commissioner  Davies.  No,  sir ;  Ave  have  it  here,  Senator. 

Senator  Pomerene.  The  report  of  the  Bureau  of  Corporations 
gives  all  that  for  those  years. 

Commissioner  Davies.  In  part,  yes.  Take  an  integrated  concern. 
In  1902-1906  the  total  cost  of  its 'basic  pig  iron  was  $12.82.  That 
$12.82  was  made  up  as  follows: 

Blast  furnace  expense,  $1.91;  the  coke,  $3.30;  limestone,  $0.47; 
the  ore  metallic  mixture,  $7.14;  a  total  of  $12.82.  The  metallic  mix- 
ture cost,  $7.14,  includes  $4.37  for  freight,  $1.02  for  labor  at  mine, 
and  other  items.  The  cost  of  the  ore  at  the  mine  was  $1.23,  the  cost 
at  the  lower  Lake  ports  was  $2.64;  there  being  2  tons  of  ore  made 
the  total  cost  $7.14.  The  two  factors  the  Senator  wants  for  comparn- 
son  are  the  cost  at  the  mine,  $1.23,  and  the  cost  at  the  lower  Lake 
port,  $2.64,  and  the  cost  at  the  blast  furnace,  $7.14. 

Senator  Cummins.  That  would  not  be  the  cost  of  the  ore  at  the 
blast  furnace;  you  mean  that  would  be  the  cost  of  the  ore  that  would 
be  necessary  to  make  1  ton  of  steel  ? 

Commissioner  Davies.  The  cost  of  2  tons  of  ore. 

Senator  Cummins.  Twice  $2,64  does  not  amount  to  $7.14.  I 
think  they  must  have  added  something  else  in  there. 

Commissioner  Davies.  That  is  right. 

Senator  Cummins.  Twice  $2.64  would  be  $5.28. 

Commissioner  Davies.  The  point  is,  2  tons  of  ore  would  be  $").28; 
but  that  is  only  ore;  there  are  other  items,  freight  cost,  labor,  etc. 

Senator  Cu3imins.  That  would  be  the  cost  at  the  blast  furnace? 

Mr.  WoosTER.  No ;  at  lower  Lake  ports. 

Commissioner  Davies.  That  makes  the  cost  at  the  furnace  on  2 
tons  $7.14,  including  freight. 

Senator  Cummins.  That  is  what  I  wanted  to  get,  to  show  that  you 
included  in  that  the  freight  from  the  port  to  the  blast  furnace. 

Commissioner  Davies.  Exactly. 

Senator  Cummins.  How  much  does  it  cost  to  lay  down  the  same 
ore  at  the  same  blast  furnace  now  ? 

Commissioner  Davies.  At  the  lower  Lake  ports  the  cost  now 
would  be  $3,  in  contrast  to  $2.64.  The  freight  would  remain  the 
same,  so  that  the  increase  in  cost  would  be  36  cents  per  ton,  which 
would  be  72  cents  per  ton  of  pig  plus  any  increase  in  conversion 
cost  at  blast  furnaces. 

Senator  Cummins.  I  am  not  getting  up  to  that  yet.  I  hope  you  do 
not  think  I  am  asking  too  much  in  detail. 

Commissioner  Davies.  Oh,  no. 

Senator  Cu^nimins.  But  you  have  an  increased  cost  of  68  cents  a 
ton,  68  cents  for  the  2  tons  at  the  blast  furnace.  Now,  does  that 
include  the  increased  cost  of  labor  in  getting  that  ore  to  the  blast 
furnace  ? 

Commissioner  Davies.  No;  there  would  be  some  increase  in  labor 
costs. 


PBICE  BEGULATION   OF  STEEL.  19 

Senator  Cummixs.  Now,  we  come  to  the  blast  furnace.  You  put 
in  2  tons  of  ore  and  a  ton  of  coke.  What  is  the  present  cost  of 
getting  the  coke  to  the  bhist  furnace — I  mean,  of  the  coke  and  <;etting 
it  to  the  blast  furnace — by  one  of  these  companies  which  owns  its  own 
coal  fields  and  coke  ovens? 

Connnissioner  Davies.  I  wonder  whether  this  statement  would  an- 
swer this  question.  Increase  in  cost  of  pig  iron  to  the  integrated 
company,  as  shown  by  our  June  hgures  on  pig  iron,  over  wliat 
normally  obtains,  as  shown  by  their  books,  does  not  exceed  $i  a 
ton.  It  does  not  exceed  for  billets  an  increase  of  over  $0  a  ton.  Is 
it  that  you  want  to  know — what  the  changed  conditions  have  brought 
in  increased  cost  for  an  integrated  company  ?     That  is  about  it. 

Senator  Cummin; s.  It  is  about  $6  a  ton  for  ingots  or  billets? 

Commissioner  Davies.  Yes,  sir. 

Senator  Cummins.  For  which — ingots  or  billets? 

Connnissioner  Davies.  We  will  say  billets. 

Senator  Pomerene,  That  would  make  a  total  increase  in  cost,  then, 
from  the  crude  ore  to  the  billets,  of  $10  ? 

Senator  Cummins.  !No;  he  is  including  that.  The  total  increase 
horn  the  mine  right  up  to  the  billet,  you  say,  is  $10  a  ton;  that  is 
the  increase  in  cost  as  compared  with  four  years  ago  ? 

Commissioner  Davies.  On  plates  and  shapes.  I  am  more  familiar 
with  plates  and  shapes  than  I  am  with  billets,  but  on  plates  and 
shapes  the  increase — and  that  is  a  stage  further — the  increase  has  not 
been  more  than  $9  a  ton.  Let  me  give  you  these  figures.  Senator. 
For  pig  iron  for  1916  the  average  cost  of  integrated  concerns  for 
pig  iron  was  $11.15;  for  June,  1917,  the  average  cost  was  $13.02;  so 
that  the  increase  in  cost  is  practical!}^  $2.50.  Now,  the  costs  for  the 
same  character  of  company  in  1910  would  be  about  $10.09  and  for 
1902-1906  it  would  be  about  $13. 

Senator  Cummins.  So  it  would  make  the  cost  in  the  middle  of 
this  year  how  much? 

Commissioner  Davies.  To  the  low-cost  company? 

Senator  Cummins.  The  integrated  company. 

Commissioner  Davies.  $13.62. 

Senator  Cummins.  On  pig  iron? 

Commissioner  Davies.  On  pig  iron,  but  the  average  cost  to  the 
i-oncern  that  has  to  buy  its  ore  and  coke  would  be  $21. 

Senator  Cummins,  t  understand,  but  for  that  kind  of  company  we 
have  been  considering  the  present  cost  of  pig  iron  does  not  exceed 
$14  a  ton? 

Commissioner  Davies.  That  is  right. 

Senator  Cummins.  Then,  how  much  Avould  it  cost  per  ton  to 
turn  it  into  billets? 

Commissioner  Davies.  Let  me  take  sheets  and  plates,  because  those 
are  what  our  figures  are  directed  to  more,  because  of  shipping  re- 
<]uirements.  andfor  the  purpose  of  illustration  are  just  as  good. 

Senator  Cummins.  Very  well. 

Commissioner  Davies.  In  1902-1906  the  average  cost  of  plates  and 
shapes,  including  intercompany  profits,  was  $27:  in  1910,  for  the 
same  class,  excluding  intercompany  profits,  $22.50.  That  is  the 
highly  integrated  concern,  the  comparable  cost  would  be  about  the 
same.     In  1916  the  average  cost  was  $27.44    which  excluded  inter- 


20  PRICE   REGULATION    OF    STEEL. 

company  profits.  In  1917  the  cost  in  May  or  June  was  $34,  so  the 
statement  I  made  that  it  was  approximately  $6  or  $8  increase  over 
normal  is  correct. 

Senator  Cummins.  And  that  includes  the  profits  on  what  you  call 
the  intercompany  profits? 

Commissioner  Dames.  That  excludes  them.  If  you  included  them 
it  would  add  $4  or  $5  a  ton. 

Senator  Cummins.  $34  a  ton.  Now.  what  was  the  price  of  those 
same  shapes  and  plates  at  that  time  ? 

Commissioner  Davies.  Plates  at  the  present  time  are  about  $8  a 
hundredweight. 

Senator  Pomerexe.  That  is  $160  a  ton  ? 

Commissioner  Davies.  Yes:  and  they  nm  as  high  as  $11  per 
hundredweight. 

Senator  Pomerexe.  Have  you  figured  in  another  way — what  would 
be  the  per  cent  of  profit  ? 

Commissioner  Davies.  Yes,  sir.  I  think  it  would  be  batter  if  I 
could  just  simply  go  through  and  give  you  a  brief  resume  of  what 
these  figures  show. 

Senator  Pomerexe.  And  in  that  connection  I  would  like  this,  if 
you  have  got  the  information,  and  then  I  will  not  interrupt  you 
further.  First,  show  the  profits  to  these  companies  at  present  prices 
per  ton,  and  then  show  the  profit  on  the  investment,  if  you  can. 

Senator  Cummixs.  I  think  you  are  right  about  pursuing  your  own 
line,  but  I  wanted,  simply  as  a  conclusion  to  this  inquiry  that  I  had 
been  making,  to  have  it  appear  that  for  a  form  of  steel  which  costs 
one  of  these  fnlly  organized  companies  $34  a  ton,  the  company  is 
now  charging  $179  a  ton. 

Commissioner  Davies.  The  United  States  Steel  Corporation,  I  be- 
lieve, is  selling  as  high  as  4.5  and  5  cents  a  pound.  I  was  told  by  one 
of  their  officials  that  they  did  not  sell  at  a  higher  price  than  4.5 
cents ;  that  the}^  had  been  offered  as  high  as  $11  a  hundredweight  and 
had  refused  it. 

Senator  Cummixs.  I  was  not  referring  to  any  particular  com- 
pany. You  quoted  $8  a  hundred  as  the  market  pries  for  these  forms, 
reckoning  2,240  pounds  to  the  ton,  the  result  is  $179.20  for  a  ton  of 
steel  that  costs  the  company,  not  including  profit,  $34. 

Commissioner  Davies.  I  think.  Senator,  this  will  be  following  right 
along  that  line  further.  You  have  the  costs  now,  including  inter- 
company profits,  on  shapes  and  plates.  The  Bureau  of  Corporations 
made  an  estimate  in  1913  of  the  investments  per  ton  of  plates  necas- 
sary  to  produce  a  ton  of  plates,  and  then  stated  what  the  profits  per 
ton  of  plates  would  be  required  in  dollars,  to  bring  a  certain  profit 
in  per  cent  on  the  investment  required  to  produce  it.  and  a  margin 
over  cost  of  $7.28  on  plates,  this  item  that  you  are  figuring,  would 
then  yield  a  per  cent  on  estimated  total  integrated  investment  of  8.8 
per  cent.  A  margin  of  $15  would  bring  a  return  on  investment  of 
18  per  cent.  To  answer  your  question,  then,  if  the  plates,  we  will 
say.  ccst  $40,  including  intercompany^  profits  to-day.  and  were  sold 
at  $160,  that  would  leave  a  net  profit  of  $120,  and  the  profit  on  in- 
vestment would  be  very  close  to  140  per  cent.  It  should  be  under- 
stood that  his  computation  is  on  estimated  investment. 

Senator  Pomerexe.  Per  year? 

Commissioner  Davies.  Yes,  sir ;  per  year. 


PKICE   REGULATION   OF   STEEL.  21 

Does  that  answer  your  question.  Senator,  as  to  this  particular 
item? 

Senator  Pomerene.  Yes ;  I  think  it  does. 

The  Chairman.  Is  there  such  an  increase  of  plant,  in  order  to 
cover  this  emergency,  as  to  warrant  any  such  profit?  In  other  words, 
is  the  risk  of  plants  which  are  now  being  constructed,  or  which  ought 
to  be  constructed,  to  meet  the  demand  being  idle  after  this  emergency 
is  over:  does  that  risk  warrant  so  large  an  increase  of  profit? 

(commissioner  Davies.  This  estimate  of  investment  required  to 
produce  a  ton  of  pig  iron  plates  and  shapes,  which  I  would  like  to 
go  through,  was  based  upon  the  investment  cost  at  normal  times, 
wh3re  the  building  costs  were  probably  lower  than  they  are  now,  and 
if  you  were  to  take  present  investment  costs  they,  of  course,  would 
be  ver}-  much  higher,  but  for  the  great  bulk  of  the  production  the 
old  investment  costs  are  the  costs  upon  which  it  should  be  computed, 
because  their  plants  were  going  concerns. 

Senator  Cummins.  You  have  stated.  I  think,  there  has  been  an 
fidditional  investment  of  not  over  $5,000,000? 

Commissioner  Davies.  I  know  of  that  much.    I  think  there  is  more. 

The  Chairman.  Is  there  any  danger  of  any  part  of  that  new  in- 
vestment cost  being  scrapped  after  the  war  ? 

Commissioner  Davies.  Of  course  that  is  a  matter  of  judgment. 
Senator.  There  are  opinions  both  ways.  My  own  judgment  would 
be  there  is  not  any  danger  of  its  being  scrapped.  I  think  the  use  and 
need  of  steel  would  be  much  greater  after  the  war  than  it  was  prior 
to  the  war,  but  that  that  factor  should  be  considered  in  making  a 
price  I  would  agree  to. 

I  can  run  through  these  various  basic  materials  here  very  briefly 
and  give  the  costs  for  1902-1906,  1910,  1916,  and  19i7.  The 
average  cost  in  1902-1906  of  Lake  ore.  Missabe,  was  $2.45;  1910, 
$2.20;  1910.  $2.55 ;  average  for  1917.  $3.16.    That  is  iron  ore. 

Senator  Cummins.  At  the  lower  Lake  ports? 

Commissioner  Davies.  Yes,  sir.  Coke,  1902-1906,  $1.61;  1910, 
$1.54;  average  for  1916,  $2,62;  average  for  1917,  $3.12,  an  increase 
in  cost  of  almost  100  per  cent  on  coke. 

The  average  price  of  pig  iron  in  1916  in  class  1,  the  concerns  that 
own  their  iron  ore  and  own  their  coke,  was  $11.15  ;  their  average  cost  in 
1 917  was  $13.62,  an  increase  of  about  $2.50  a  ton  over  1916 ;  1916  being 
about  the  average  they  obtained  normally  theretofore. 

In  class  2,  the  concerns  that  had  to  buy  their  iron  ore  and  buy 
their  coke,  the  average  cost  of  pig  iron  for  1916  was  $16  and  the 
average  cost  for  1917  was  $21.  a  net  increase  this  year  of  $5. 

On  steel  shapes,  the  average  cost  in  1916  of  class  1,  the  highly  in- 
tegrated companies,  was  $27.44;  in  1917,  it  Avas  $34.56. 

Class  2,  the  class  that  had  to  l)uy  its  iron  ore  and  coke,  in  1916, 
the  cost  for  shapes  Avas  $31.30;  1917,  $43.11,  an  increase  of  about  $11. 

Lastly,  the  class  that  had  to  buy  its  steel,  the  cost  of  shapes  in  1916 
was  $42.  as  contrasted  Avith  the  average,  normal  price,  of  $27,  there- 
tofore, and  in  1917,  $48,  which  was  $6  more  than  in  1916. 

On  })late.s.  the  average  cost  was  about  $27  in  1916,  for  class  1;  for 
the  same  product  in  1917  the  average  was  about  $35,  an  increase  of  $7. 

In  class  2,  those  that  bought  their  iron  ore  and  coke,  the  cost  in 
1916  for  plates  Avas  $37.  and  in  1917,  $46.  an  increase  of  about  $9 
in  cost.     You  see  the  Avider  spread  as  you  go  up  in  the  higher  classes. 


22  PRICE   EEGULATION   OP   STEEL. 

For  class  3,  the  class  that  buys  its  pig  iron,  its  cost  uf  plates  was 
{?38  in  1916,  average,  as  against  $27  normal,  and  $53  in  1917,  a 
jump  of  $15  this  j-ear  oA^er  last  year.  This  class  is  paying  higher 
prices  for  its  pig  iron  this  year  than  last. 

In  class  4,  the  class  that  bought  its  semifinished  product,  the  cost; 
in  1916  for  plates  was  $51,  and  the  cost  in  1917  was  $78.  It  shows 
not  onl}^  a  higher  cost  for  pig,  but  a  higher  cost  for  steel.  That 
gives  the  range  in  costs. 

The  Chairman.  The  war,  I  believe,  broke  out  in  August,  1914? 

Commissioner  Da  vies.  August  1.  1914. 

The  Chairman.  When  was  the  effect  of  that  war  appreciably  felt 
in  the  steel  market? 

Commissioner  Davies.  I  think  it  was  felt  immediately  and  prices 
became  subnormal,  but  it  started  the  price  upward  about  August, 
1915,  a  year  later,  and  then  they  went  up  by  leaps  and  bounds. 

The  manner  in  which  we  conducted  this  cost  inquiry  was  briefl}^ 
rhis:  We  took  each  one  of  the  basic  materials,  ore,  coke,  pig  iron, 
ingots,  plates,  and  shapes.  We  got  the  average  costs  that  obtained 
in  1902-1906  and  1910;  then  the  1916  costs;  then  the  1917  costs,  and 
then  the  present  prevailing  prices;  we  also  estimated  the  profit  per 
ion  of  product  in  dollars  it  Avould  be  necessarj'^  to  procure  to  yield 
a  certain  return,  we  Avill  say  of  12  per  cent,  on  the  investment  required 
to  produce  that  ton  of  product. 

For  instance,  in  iron  ore  our  costs  cover  85  per  cent  of  the  produc- 
tion of  tlie  country.  The  average  cost  of  Mesaba  ore  at  lower  Lake 
ports,  1902-1906,  was  $2.45  per  gross  ton.  The  average  profit  during 
that  period  on  all  the  ore  sold  was  44  cents  per  ton.  The  present 
quotations  on  all  lake  ores  is  at  $1.60  a  ton  higher  than  in  1916, 
whereas  the  increases  in  the  average  cost  were  from  70  to  80  cents  a 
ton.  The  price  has  doubled.  The  cost  increased  77  cents;  the  price 
increased  $1.60.  Profits  for  a  period  of  five  years,  1902-1906,  on 
Lake  ore  Avere  from  44  to  50  cents,  Avhich  would  gi^^e  a  profit  of  12  per 
cent  on  the  investment  required  to  produce  a  ton  of  ore.  On  present 
costs  90  per  cent  of  Mesabi  iron  ore  cost  $3.94,  or  less  at  lower  Lake 
ports.  We  took  the  large  percentage  because  these  figures  Avere 
needed  in  order  to  furnish  a  base,  I  presume,  for  price,  and  it  is 
perfectly  apparent  that  if  you  fix  a  flat  price,  unless  you  fix  the 
price  high  enough,  you  will  not  get  the  production.  So  we  took  the 
figure  at  Avhich  90  per  cent  of  the  production  of  ore  could  be  pro- 
duced. Ninet}^  per  cent  of  Mesabi  ore  could  be  laid  doAvn  at  lower 
Lake  ports  at  $3.94  cost.  If  12  per  cent  on  investment  Avere  added, 
50  cents  would  have  to  be  added  to  get  a  price  on  that  basis. 

For  the  five-year  period  on  coke,  Connellsville  beehive  coke,  the 
average  profit  on  all  coke  was  51  cents  a  ton.  The  average  cost  for 
that  five-year  period,  1902-1906,  was  $1.46  a  ton.  In  1917  the  aA''er- 
age  cost  of  Connellsville  coke  was  $3.10  a  ton.  Eighty-fiA'e  per  cent 
of  Connellsville  coke  in  merchants'  ovens  cost  $4.08,  and  90  per  cent 
of  the  steel  companies'  ovens  cost  $3.10.  A  12  per  cent  profit  per 
ton,  as  computed  by  the  Bureau  of  Corporations,  on  the  steel  com- 
panies' investments  in  1910  would  necessitate  a  profit  on  the  cost  of 
coke  of  about  55  cents  a  ton. 

For  the  period  1902-1906  on  pig  iron  the  average  book  costs  of 
northern  pig  iron  were  $14.04;  the  average  profit  of  all  companies 
for  that  period  was  $2.05  on  all  pig  iron.     On  that  basis  it  is  com- 


PRICE  KEGULATIOX  OF  STEEL.  23 

puted  that  they  make  about  12  per  cent  on  the  investment  required 
to  produce  it. 

In  1917,  84  per  cent  of  the  pig  iron  produced  by  the  steel  com- 
panies' furnaces  cost  $15.92  or  less;  82  per  cent  of  the  northern 
merchants'  furnaces  cost  $19.50  or  less. 

Senator  Cummiks.  What  was  the  year? 

Commissioner  Da  vies.  1917.     And  for  merchants'  furnaces,  $19.50, 

Now,  the  profit  per  ton  in  dollars  in  relation  to  investment:  It 
has  been  estimated  by  the  Bureau  of  Corporations  in  its  reports 
heretofore  made  that  on  a  basis  of  12  per  cent  on  the  investment  the 
margin  of  profit  above  cost  per  ton  of  pig  iron  for  nonintegrated 
plants  would  range  from  $1.98  to  $2.80;  for  an  integrated  plant  it 
would  range  from  $4.50  to  $5.  If  the  price  of  pig  iron  were  fixed 
at  $25  a  ton  and  an  integrated  concern  covdd  produce  that  at  $15  a 
ton  and  get  a  net  profit  of  $10  a  ton  over  cost,  because  their  costs  are 
low,  such  concern  would  make  about  25  per  cent. 

Senator  Cumimins.  What  is  to  be  said  of  these  people  who  have 
been  selling  it  at  $55  a  ton  ? 

Commissioner  Da  vies.  A  concern  that  sells  it  at  $55  a  ton.  whose 
costs  are  $15  a  ton,  would  be  making  a  profit  of  $40  a  ton.  which 
would  be  in  the  neighborhood  of  100  per  cent  profit. 

Senator  Poimekene.  More  than  that,  would  it  not  be? 

Commissioner  Da  vies.  At  least  that. 

Senator  Pomereke.  It  would  be  over  200  per  cent. 

Senator  Cummins.  He  is  not  figuring  it  on  cost.  He  is  figuring  it 
on  the  investment  necessary  to  produce  it. 

The  Chairman.  Mr.  Davies,  have  you  any  idea  what  the  total  in- 
vestment is  in  all  these  steel  companies? 

Commissioner  Davies.  No.  sir.  The  Bureau  of  Corporations  based 
this  estimate  upon  the  Steel  Co.'s  investment  in  1910.  and  Dr. 
Walker  deserves  the  principal  credit  for  having  worked  out  an 
estimate  of  (he  amount  of  investment  required  jjcr  ton  to  produce  a 
ton  of  the  various  products  all  the  way  through,  and  what  the  profits 
in  dollars  per  ton  would  yield  on  the  investment  required  to  pro- 
duce it. 

Senator  Cum:mins.  We  had  that  inquiry  up  here  once,  Senator,  and 
I  do  not  know  what  it  is  now.  but  a  few  vears  ago  the  investments 
were  estimated  to  be  about  $3,500,000,000.  ' 

The  Chairman.  The  Steel  Trust  alone  has  about  a  billion  and  a 
half  dollars,  according  to  its  capitalization. 

Commissioner  Davies.  Its  capitalization  is  $1,400,000,000;  its  sur- 
plus is  $493,000,000;  its  total  book  investment,  therefore,  is  in  the 
neighborhood  of  $1,900,000,000. 

The  Chairman.  It  is  estimated  to  have  about  GO  per  cent  of  the 
entire  industry,  is  it  not? 

Commissioner  Davies.  From  40  to  60  per  cent.  So  three  and  one- 
half  billions,  I  presume,  would  be  about  all  right. 

The  Chairman.  I  have  just  been  making  a  calculation  here.  I 
understood  you  to  say  that  the  total  production  of  steel  was  about 
40.000,000  tons? 

Commissioner  Davies.  Steel  ingots. 

The  Chairman.  And  that  the  price  of  ingots  before  the  war  was 
■what? 

Commissioner  Davies.  The  ingots  were  not  sold. 


24  PRICE    EEGULATION    OF    STEEL. 

The  Chairmais'.  "Well.  I  mean  the  ])rice  of  steel  per  ton,  generally. 

Commissioner  Davies.  The  price  of  steel  plates? 

The  CiiAiRMAx.  Yes;  steel  plates. 

Commissioner  Davies.  The  price  of  steel  plates  would  be  about 
$1.60  to  $-2  a  hunclredweio-ht.    That  would  be  per  cro&s  ton  $50  to  $80. 

Mr.  WoosTER.  You  can  take  Bessemer  steel  billets,  which  in  1913 
Avere  $28  a  ton.    They  dropped  to  $20  a  ton  at  the  end  of  1914. 

The  Chairman.  What  are  they  now  ? 

Commissioner  Davies.  $100,  shell  billets. 

Mr.  AVooster.  Bessemer  steel  billets  Avent  up  as  high  as  $100  in 
July,  and  are  noAv  quoted  at  $05. 

The  Chairman.  I  Avas  just  figuring,  assuming  $50  a  ton  profit  is 
made  on  steel,  do  present  prices  indicate  as  nnich  as  that:  do  present 
prices  indicate  a  profit  of  $50  a  ton  on  steel? 

Commissioner  Davies.  For  some  companies,  yes,  Senator;  but 
you  must  bear  in  mind  the  costs  vary. 

The  Chair^nian.  Take  the  United  States  Steel  Corporation? 

Commissioner  Davies.  Take  the  most  highly  integrated  company 
and  i)lates  and  shapes  at  current  prices,  they  make  a  great  deal  more 
than  $50  a  ton. 

The  Chairman.  Very  Avell.  If  the  entire  business  Avere  integrated, 
as  the  business  of  the  United  States  Steel  Corporation  is,  and  $50 
a  ton  Avere  made  on  everv  ton  of  the  40,000,000  tons  produced  an- 
nually, that  would  be  $2,000,000,000  profit,  Avould  it  not,  which 
Avould  amount  annually  to  more  than  one-half  of  the  total  capitali- 
zation ? 

Commissioner  Davies.  I  am  folloAving  you. 

The  Chairman.  Have  you  seen  any  estimate  of  the  amount  of 
neAv  capital  that  is  required  in  order  to  meet,  not  onl_v  the  goA^ern- 
mental  demands,  but  the  domestic  demands  for  steel? 

Commissioner  Davies.  No,  sir;  I  have  not  seen  any  such  yet.  But 
before  you  leave  that  other  subject  I  think  in  fairness  it  should  be 
said  that  a  price  that  w-ill  giA^e  the  highly  integrated  concern  $50 
profit  may  not  give  the  small  producer,  the  unintegratecl  class,  5  per 
cent  on  present  costs.  In  other  words,  if  5^011  are  going  to  have 
the  smaller  organizations  produce  you  have  got  to  fix  a  flat  price 
that  Avill  necessarih^  give  the  loAV-cost  man  a  very  large  margin  of 
profit,  $50  Ave  Avill  say,  in  order  to  make  its  possible  that  the  little 
fellow  can  live. 

Senator  Cummins.  There  is  another  Avay  by  Avhich  the  condition 
can  be  ameliorated.  If  you  fix  the  price  of  iron  ore  at  a  reasonable 
figure,  or  fix  the  price  of  pig  iron  at  a  reasonable  figure,  then  the 
little  fellow  Avill  not  suffer  if  there  be  a  reasonable  price  fixed  for  the 
finished  product. 

Commissioner  Davies.  That  is,  of  course,  true.  Senator,  but  I  think 
you  Avill  find  that  if  the  prices  are  fixed  right  straight  through  on 
the  basis  of  Avhat  85  or  90  per  cent  of  the  production  could  be  pro- 
duced at,  so  as  not  to  limit  production,  because  prcduction  is  as 
important  as  price  in  steel,  I  think  you  Avill  find  that  similar 
differences  in  cost  Avill  still  obtain,  although  the  spread  Avould  not 
be  quite  as  wide.  In  other  words,  if  you  fix  the  price  of  iron  ore  at 
$25,  sa}'^,  so  as  to  get  the  little  producer  of  pig  iron  in  as  Avell  as  the 
big  producer,  the  low-cost  producer  Avould  be  making  a  A^ery  laigo 


PRICE   REGULATION   OF   STEEL,  25 

margin  of  profit  out  of  the  investment,  whereas  the  little,  high-cost 
producer  of  pig  iron  would  be  making  a  very  small  margin  of  profit, 
and  theie  would  probab'y  be  some  prcducers  of  pig  iron  who  would 
not  produce  at  all  at  the  price. 

The  Chairman.  That  is  irue,  there  is  necessarily  a  spread,  because 
there  is  a  certain  economy  in  production  that  can  be  secured  in  the 
full}'  integrated  concern  that  can  not  be  secured  in  the  individual 
concern,  but  that  spread  will  not  be  very  great  if  the  three  classes 
that  you  have  named,  the  second,  third,  and  fourth  classes,  are  able 
to  buy  their  raw  material.  I  think  there  are  a  good  many  instances 
in  which  a  steel  concern,  if  permitted  to  buy  its  pig  iron  at  a  fair 
price,  could  produce  its  finished  product  or  article  at  a  less  cost  tlian 
the  United  States  Steel  Corporation,  giving  the  steel  corporation 
profit  for  the  various  steps  it  takes  in  the  production.  But,  as  a 
general  principle,  you  are  right,  but  we  can  not  endure  a  situation  in 
which  the  smaller  people  are  compelled  to  pay  these  enormous  and 
unreasonable  prices  for  their  raw  material.  I  think  that  is  one  of 
the  great  objects  to  be  secured  in  this  legislation.  You  agree  with 
me,  do  you  not  ? 

Commissioner  Davies.  Yes;  I  agree  with  you  entirely.  If  the 
prices  of  the  basic  materials — iron  ore,  coke,  and  pig — and  ingots  and 
billets  were  fixed  so  that  the  class  4  man  could  get  them  at  that  price 
it  would  reduce  his  cost  very  materially.  The  high  prices  of  $68 
«nd  $92  cost,  wliich  we  hav?  found  in  some  of  the  smaller  companies, 
are  largely  reflected  in  the  high  cost  for  metallic  mixture.  That  is, 
the  high  cost  of  their  material.  But  still  if  you  Avere  to  take  the  basic 
prices  and  fix  them  on  a  plane  which  would  bring  in  90  per  cent  of 
the  production,  we  will  say,  you  would  still  get  your  price  for  plates 
and  shapes  so  high  that  it  would  bring  a  very  large  margin  on  invest- 
ment, probably  as  high,  to  be  conservative,  as  36  per  cent  for  the 
highly  integrated  man,  where  the  little  man  would  be  making  a 
profit  of,  sav,  10  per  cent,  or  some  of  them  would  make  no  profit 
at  all. 

Senator  Cummins.  I  have  not  reduced  that  to  a  table  or  compu- 
tation; I  do  not  know,  therefore  I  do  not  attempt  to  say;  but  you 
said  that  the  merchant  blast  furnace,  paying  a  reasonable  price  for 
■or?,  can  produce  pig  iron  for  less  than  $20  a  ton  ? 

Commissioner  Davies.   Yes. 

Senator  Cummins.  Now,  from  that  time  on,  with  his  pig  iron, 
there  is  no  great  difference  between  his  cost  and  the  cost  of  the  highly 
r)rganized  concern  ? 

Commission ?r  Davies.  If  you  were  to  fix  a  price,  Senator,  so  that 
you  would  get  your  production  of  ore  and  your  production  of  coke, 
you  would  have  to  fix  the  prices  so  high  that  your  price  of  pig  iron 
would  run  up  pretty  high. 

I  do  not  want  to  leave  a  misapprehension  on  this.  There  are  blast 
furnaces  to-day  whose  costs  for  pig  iron  run  up  much  higher  than 
$20.  There  are  merchant  furnaces  that  pay  as  high  as  $6  or  $7  p?r 
ton  for  their  ore,  $14  for  the  2  tons  of  ore,  and  as  high  as  $16  for 
their  coke,  so  that  will  be  $30  for  coke  and  ore,  and  probably  $3  or  $4 
for  conversion  costs  and  overhead,  so  their  costs  would  come  up  per 
ton  to  $32  and  $34.  But  that  is  due  to  the  fact,  as  you  have  sug- 
gested, that  the  cost  of  ore  and  cost  of  coke  is  so  high. 


26  PEICE    REGULATION    OF    STEEL. 

The  Chairman.  Do  you  know,  Mr.  Davies,  what  the  steel  output 
in  tons  of  the  United  States  Steel  Corporation  is? 

Commissioner  Davies.  I  think  we  have  that.  I  think  it  runs  about 
40  or  50  per  cent  right  straight  through. 

Senator  Cummins.  It  is  just  about  10.000,000  tons. 

The  Chairman.  That  would  be  only  25  per  cent. 

Commissioner  Davies.  I  think  it  is  closer  to  15.000,000  or  16.000,000 
than  10,000,000.     I  would  not  be  sure. 

Dr.  Walker.  About  15,000,000  tons  finished  product. 

Senator  Ci7:mmtns.  Have  you  got  the  report?  I  have  not  seen  any- 
thing excepting  their  last  annual  report,  but  if  you  have  that  there  it 
would  give  it  in  a  moment. 

The  Chairman.  Then  how  is  it  claimed  it  represents  40  to  60  per 
cent  of  the  industry? 

Senator  Cummins.  It  owns  the  mines,  owns  the  railroads,  and  owns 
the  ships. 

Commissioner  Davies.  Here  is  the  fact :  Of  steel  ingots  the  United 
States  Steel  Corporation  produces  20,607,000  tons  out  of  a  total  of  all 
companies  of  43,000,000  tons. 

Senator  Cummins.  This  is  of  ingots. 

Commissioner  Davies.  Steel  ingots;  the  United  States  Steel  Cor- 
poration produces  20,607.000  tons.  That  is  authentic.  It  is  taken 
from  the  Iron  and  Steel  Works  Directory  of  the  United  States  and 
Canada. 

The  Chairman.  Do  I  understand  that  ingots  is  the  basic  form  of 
steel? 

Commissioner  Davies.  Yes,  sir. 

The  Chairman.  ^'\^ien  you  say  that  the  United  States  Steel  Cor- 
poration produces  over  20,000,000  tons  of  steel  ingots,  that  means 
20,000,000  tons  of  all  the  steel  that  is  produced  then? 

Commissioner  Davies.  All  the  basic  steel  that  is  produced;  yes, 
sir:  that  is,  nearly  50  per  cent. 

The  Chairman.  What  is  the  difference  between  the  ingot  and 
the  plate  that  you  speak  of  in  cost,  in  price,  rather? 

Commissioner  Davies.  Ingots  are  not  sold  to  any  extent:  billets 
are  sold.  The  billet  is  the  rolled  or  shaped  ingot.  You  asked  the 
difference  in  cost? 

The  Chairman.  In  price. 

Senator  Cummins.  He  said  that  billets  were  $65  a  ton  and  had 
been  up  to  $100  a  ton. 

The  Chairman.  What  are  plates? 

Commissioner  Davies.  Plates  vary  from  $92  a  ton  up  to  $220  a  ton. 

The  Chairman.  I  am  endeavoring  to  make  a  calculation.  If  the 
United  States  Steel  Corporation  produces  20,000,000  tons  annually 
of  steel  and  the  profit  is  $50  a  ton,  that  would  make  $1,000,000,000 
annual  profit.  Now,  it  is  not  contended  that  the  Steel  Trust  does 
make  that  amount  in  profit,  is  it? 

Commissioner  Davies.  No.  A  great  deal  of  its  product  is  at  con- 
tract price,  below  the  market.  The  Bureau  of  Corporations  report 
states  on  supporting  facts  that  when  the  United  States  Steel  Cor- 
poration was  organized  with  a  capital  of  $1,400,000,000,  of  which 
$500,000,000  was  common  and  the  rest  divided  up  between  bonds 
and  preferred  stock,  that  the  real  value  of  the  properties  was  in  the 
neighborhood  of  $700,000,000.     Since  that  time  the  United  States 


PRICE   REGULATION   OF   STEEL.  27 

Steel  common  stock  has  gone  from  the  low — I  think  that  it  has  been 
as  low  as  8— up  to  as  high  as  126.  It  has  built  up  a  surphis  of  over 
$400,000,000,  so  that  perhaps  any  water  that  obtained  in  1901,  when 
it  was  organized,  has  been  solidified  by  the  profits  that  have  been 
turned  back  into  investments  and  capital  account,  and  the  United 
States  Steel  Corporation,  by  reason  of  its  integration  and  its  effi- 
ciencies, on  any  flat  price  that  is  made,  will  make  a  very  large  per- 
centage of  profit  (but  the  figures  you  name  would  be  too  high),  be- 
cause if  the  price  of  plates  or  shapes,  or  the  price  of  pig  is  fixed  at 
such  a  point  that  the  production  of  the  country  will  come  out,  be- 
cause it  can  make  it  at  the  price  fixed,  it  will  have  to  be  so  high  that 
the  United  States  Steel  Co.  will  be  making  a  very  large  profit,, 
whereas  the  smaller  nonintegrated  plant  will  be  making  a  sm»n 
profit. 

Some  of  the  salient  facts  which  our  investigations  have  disclosed 
are  the  very  wide  margins  of  cost  between  the  high  and  low  cost 
producers  in  the  industry:  that  the  prices  in  the  market  have  been 
determined  largely  not  by  costs  but  by  competitive  buying,  with  a 
very  large  demand  and  a  relatively  limited  supply;  that  costs  are 
increasing;  that  if  any  price  is  fixed  to  produce  volume  of  pro- 
duction it  will  have  to  be  a  price  that  will  induce  the  high-cost  man 
as  well  as  the  low-cost  man  to  produce. 

Then  we  have  also  found  that  a  very  large  amount  of  the  pro- 
duction is  not  getting  these  high  market  prices,  and  does  not  repre- 
sent all  profit,  because  there  are  a  large  number  of  old  contracts  out- 
standing at  low  prices.  On  the  other  hand,  we  find  that  a  very 
large  amount  of  material  has  been  contracted  for  at  high  prices  for 
the  future,  so  that  the  producer  has  low  contract  prices  that  ob- 
tained before  and  now  he  is  selling  at  higher  contract  prices,  and 
it  would  not  avail  the  general  public  advantage  to  have  this  legisla- 
tion which  you  are  contemplating  enacting  unless  some  provision 
was  made  to  bring  relief  to  those  who  are  now  under  contract  for 
basic  materials  at  high  prices.  If  the  prevailing  high  prices  of 
pig  iron — say  $50 — should  obtain  for  manufacturers  who  are  manu- 
facturing steel  because  of  contracts  and  the  price  of  pig  was  put 
down  to  $25.  we  will  say,  the  man  who  was  under  contract  to  buy 
$50  pig  would  be  at  a  distinct  disadvantage  because  of  his  fore- 
handedness  in  making  provision  for  his  wants  as  opposed  to  the 
man  who  got  the  $25  pig  at  price  fixed.  So  that  unless  contracts 
for  high-priced  basic  commodities  are  suspended,  or  power  is  given 
to  some  agency  to  suspend  them  in  this  legislation,  a  large  amount 
of  the  benefit  "would  be  destroyed  and,  more  than  that,  a  great  deal 
of  inequity  would  arise  because  of  the  differences  in  costs,  the  Gov- 
ernment price  on  the  one  hand  and  the  contract  price  on  the  other. 

Those  are  some  of  the  salient  facts  that  we  have  deduced  in  this 
situation.  Mr.  Murdock  has  participated  with  us  in  this  investiga- 
tion and  I  would  be  very  glad  if  he  would  offer  anything  that  occurs 
to  him. 

The  Chairman.  I  am  a  little  bit  puzzled,  because  I  have  an  im- 
pression in  my  mind  that  in  recent  debates  it  was  stated  that  the  war 
profits  of  the  United  States  Steel  Corporation  would  amount  to 
$246,000,000  for  the  last  year.  Do  you  know  whether  any  estimate 
has  been  made  for  this  year? 

Commissioner  Da  vies.  I  do  not.  Senator. 


28  PRICE   REGULATION    OF   STEEL. 

The  Chairman.  What  I  was  trying  to  do  was  to  reconcile  that 
comparatively  small  amount  of  war  profits  with  the  assumption  that 
the  United  States  Steel  Corporation,  producing  20,000,000  tons  of 
steel  annually  and  selling  it  at  an  average  profit  of  $50  per  ton, 
would  have  an  increase  of  $1,000,000,000. 

Senator  Pomerene.  Allow  me  to  suggest  that  the  war  profits  is  a 
profit  over  and  above  the  average  profits  of  the  steel  company  for 
years  1911,  1912.  and  1913. 

The  Chairman.  Yes,  undoubtedly. 

Commissioner  Davies.  And,  Senator,  I  think  you  are  going  on  a 
misapprehension.  There  is  no  $50  profit  on  steel  ingots;  they  are 
converted  into  other  products,  which  require  additional  investments 
to  produce.  Take  billets,  I  presume  that  if  the  United  States  Steel 
Corporation  could  sell  all  of  its  billets  at  the  current  market  price, 
or  if  it  could  have  sold  all  at  the  current  market  price  that  obtained 
a  couple  of  months  ago  of  $100.  and  their  cost  on  steel  billets  were 
in  the  neighborhood  of  $35  to  $J:0,  that  they  would  make  just  exactly 
what  you  say  they  would  make.  As  a  matter  of  fact,  the}^  have  not 
sold  all  of  their  product  at  that  high  price,  and  they  have  sold  a 
large  part  of  their  product  at  low  contract  prices  which  obtained  in 
the  past,  and  they  have  refused,  I  am  told,  to  sell  some  of  their  prod- 
uct, plates,  and  shapes,  at  a  price  higher  than  $5  a  hundredweight, 
which  would  be  $100  a  gross  ton,  practically,  on  the  theory  that  it 
was  an  unhealthy  and  unstable  condition  for  the  market  to  get  into. 

The  Chairman.  Yes;  but  $100  a  ton  would  yield  what  profit? 

Commissioner  Davies.  Well.  $100  a  ton  on  the  erst  of  producing 
plates  and  shapes  at  a  cost  of,  say,  at  the  outside  of  $45,  would  be 
a  profit  of  $50  a  ton,  and  that  would  be 

The  Chairman.  Would  you  be  good  enough,  Mr.  Davies,  to  have 
your  experts  develop  that  line  as  suggested? 

Commissioner  Davies.  Just  exactly,  Senator,  what  would  you  want 
us  to  get  ? 

The  Chairman.  I  v.  ant  to  ascertain,  assuming  that  the  steel  pro- 
duction of  the  Ignited  States  Steel  Corporation  is  the  same  this  year 
as  it  was  last,  and  that  the  prices  remain  as  they  are.  what  amount  of 
mcne}-  the  Ignited  States  Steel  Corporation  at  the  end  of  the  year 
1917  would  make  as  profit  ? 

Commissioner  Davies.  That  is.  if  they  took  the  top  market  prices,  or 
if  they  were  so  situated  in  light  of  their  present  contracts  as  would 
enable  them  to  take  the  top  prices? 

The  Chairman.  If  they  would  receive  the  prices  which  they  are 
now  charging. 

Commissioner  Davies.  We  do  not  know  that  they  are  receiving 
those  prices;  we  do  not  know  what  their  contracts  are.  They  may 
have  a  great  many  contracts  at  these  high  prices,  but  probably  have 
many  at  much  lower  prices. 

The  Chairman.  Could  you  not  ascertain  that? 

Commissioner  Davies.  Yes,  sir;  I  think  we  could. 

Mr.  WoosTER.  I  think  it  is  because  they  are  not  selling  that  prices 
are  so  high.  If  they  were  selling  there  would  be  sufficient  supply  to 
bring  the  price  down  very,  very  materially. 

The  Chairman.  What  policy  is  it  that  prevents  them  from  selling 
at  the  present  prices  ? 


PRICE   REGULATION    OF   STEEL.  29 

Mr.  WoosTER.  Contracts  made  for  sale  at  lower  prices. 

The  Chairman.  Have  you  a  knowledge  of  how  lono;  those  contracts 
are  to  last?    Those  contracts,  do  they  usually  run  more  than  a  year? 

j\f  r.  AVoosTER.  No,  sir ;  I  should  say  not  more  than  six  months. 

The  Chairman.  Then,  there  can  not  be  a  very  large  amount  of  un- 
executed contracts;  at  all  events  there  can  not  be  a  very  long  period 
over  wlrch  unperformed  contracts  will  be  operative;  is  that  so? 

Mr.  WoosTER.  Yes.  sir. 

Cf mmis&ioner  Davies.  We  will  follow  that  suggestion  and  get  all 
the  material  we  can  on  it,  Senator. 

Senator  Pomerene.  I  Avant  to  make  some  suggestion,  and  after  that 
I  want  to  ask  you  a  question. 

D  •.  W.n.KER.  Taking  20.000,000  to  start  with  as  the  ingot  produc- 
tion 15,000,000  would  be  nearer  their  finished  product  quantity. 

Ihe  Chairman.  "What  wfuld  be  a  fair  estimate? 

Commissioner  Davies.  There  is  a  certain  amount  of  wastage. 

Dr.  Walk^.r.  Take  products  on  which  the  amount  between  price 
and  cost  would  be  exceptionally  high.  Probably  plates  would  show 
as  high  a  margin  as  anything.  Xaturally  you  get  a  very  much  bigger 
spread  there,  and  then  the  third  fundamental  reason  why  that  calcu- 
lation would  not  naturally  check  up  witii  your  other  information  is 
one  which  has  been  repeated  and  emphasized  already:  That  they,  to 
a  large  extent,  are  not  selling  at  those  prices;  that  they  are,  to  a 
large  extent,  executing  prior  contracts.  IdbIow  the  market;  and.  to 
some  extent,  it  may  be  those  contracts  will  run  to  next  year.  That  is 
a  matter  Ave  have  no  detailed  information  on.  And  there  are  other 
points  which  might  show  a  very  great  reduction  in  that  computation. 

The  Chairman.  I  assumed  there  must  be  some  explanation  of  it, 
but  it  has  currently  gone  out  to  the  public  that  they  are  making  $50 
a  ton  oi  their  product. 

Dr.  W.'LKER.  You  see  in  seme  months  they  are  making  very  much 
more  than  in  others,  if  they  sell  at  market  prices.  They  are  not 
neces-^arily  sellins  at  market  prices  at  the  present  time. 

Commissioner  Davies.  We  do  not  wish  to  be  understood  as  saying 
they  do  make  that  profit.  Senator,  and  at  no  time  have  I  stated  it. 

1  he  Chairman.  I  ur derstand,  and  understand  I  am  not  suggesting 
that  anything  you  said  was  misleading  at  all,  but  we  want  the  facts 
to  go  out  to  the  public  as  they  are,  and  the  average  man,  hearing  of 
thes.^  high  prices  for  steel,  will  assume  that  those  prices  would  be 
cui-rently  received  for  the  current  product,  and  then  it  is  a  very  easy 
calculation  to  make  out  enormous  profits,  and  I  think  it  was  advisable 
that  this  inquiry  should  be  clear  of  any  exaggerated  impression  given 
to  the  public  min  1. 

Com'nis  ioner  Dames.  I  agree  with  you,  Senator,  I  have  tried  to 
be  more  than  fair  in  mv  presentation  of  the  facts. 

Senator  Pomerene.  Mr.  Davies,  I  want  to  call  your  attention  to 
another  feature  of  this  case  which,  more  than  anything  else,  has 
prom'^ted  me  to  fa\or  some  legislation  along  this  line,  and  that  is 
the  effect  that  this  high  price  of  iron  and  steel  is  going  to  have  upon 
the  industries  of  the  country;  I  mean  that  class  of  industries  Avhich 
uses  iron  and  steel  foi-  their  raw  material,  and  if  your  studies  have 
covered  that  branch  of  the  question  I  should  be  glad  to  have  your 
views  respecting  it. 


30  PRICE   EEGULATION    OF   STEEL. 

Commissioner  Davies.  Senator,  it  is  very  apparent  that  these  high 
prices  and  the  projected  coming  into  the  market  of  the  United  States 
as  a  big  buyer  are  going  to  have  a  very  serious  effect  upon  the  general 
manufacturing  interests  of  the  country;  indeed,  it  is  not  only  upon 
the  manufacturing  interests  but  upon  the  consuming  public,  because 
where  a  man  buys  steel  for  the  purpose  of  manufacturing,  in  many 
situations  he  passes  his  cost  on  to  the  consumer,  A  manufacturer  of 
stoves,  the  other  day,  when  he  came  up  and  complained  to  us,  made 
this  statement:  That  he  was  a  large  manufacturer  of  stoves  and  had 
four  or  fi'^e  hundred  men  in  his  employ ;  that  he  had  been  buying 
pig  iron  for  $50  a  ton  but  could  not  get  any  contract  at  all  at  any 
price  for  his  requirements  for  the  next  four  months. 

He  stated  that  he  could  get  the  pig,  but  the  price  would  be  open — 
he  could  not  get  any  price  to  be  determined  by  the  people  furnishing 
the  pig  iron.  He  said,  "  I  have  to  make  my  price  list  based  on  the 
price  I  pay  for  pig;  when  I  send  a  man  out  to  the  retailer,  for  the 
purpose  of  selling  stoves,  he  must  be  able  to  quote  him  the  price." 
He  said,  "  I  do  not  care  what  the  cost  of  pig  is,  I  can  translate  it 
into  the  cost  and  make  the  consumer  pay  for  it,  but  I  must  have  the 
price  of  pig  fixed ;  I  do  not  care  whether  it  is  $50  or  $75,  I  will  add 
it  on  to  the  price  of  my  stoves." 

If  he  can  get  the  pig  iron,  its  cost  does  not  concern  him  very  much, 
unless  he  is  under  contract  to  deliver  in  the  future  at  a  certain  price. 

Senator  Cummins.  But  there  are  certain  consumers  to  whom  you 
can  not  pass  on  the  cost  so  quickly — certainly,  this  increased  cost. 
Take  the  man  who  is  putting  up  a  big  building.  He  finds  that  the 
structural  steel  has  advanced  from  $35  to  $40  a  ton  to  $140,  and  he 
does  not  build.  He  can  wait.  Again,  take  the  case  of  a  county  or 
municipality  that  is  about  to  put  up  new  bridges,  and  they  take  ac- 
count of  the  increased  cost  of  material,  and  they  conclude  to  build 
no  new  bridges,  and  make  the  old  ones  last  for  another  year. 

These  are  but  examples  of  tens  of  thousands  of  instances  in  which 
progress  and  construction  and  development  have  practically  ceased 
in  this  country,  according  to  my  observation. 

Commissioner  Da  vies.  Yes,  sir;  that  is  undoubtedly  true.  There 
is  one  factor  that  I  think  should  be  suggested  in  answer  to  Senator 
Pomerene's  suggestion,  and  that  is  one,  I  think,  we  have  given  a 
great  deal  of  thought  to,  and  that  is  the  condition  that  the  industrial 
part  of  our  country  is  going  to  find  itself  in  after  this  five  or  six 
million  tons  of  steel  has  been  taken  out  of  the  market  by  the  Gov- 
ernment. If  a  price  is  fixed  by  agreement  with  the  Government 
for  Government  use — because,  as  I  understand,  the  general  concensus 
of  opinion  is  now  that  the  Government  has  power  to  fix  the  price 
of  steel  and  other  commodities  for  Government  purchase,  but  it  is 
questionable  whether  under  present  law  there  is  any  power  in  the 
President  of  the  United  States  to  fix  the  price  of  steel  for  the  gen- 
eral domestic  consumers  and  private  industries — if  the  price  is  fixed 
for  the  Government,  unless  provision  is  made,  the  situation  will  be 
aggravated  as  to  the  general  public,  because,  with  five  or  six  mil- 
lion tons  taken  out  of  the  market,  there  will  be  a  less  supply  avail- 
able; the  demand  will  be  just  as  keen  or  intensified,  because  a  large 
amount  of  the  supply  is  going  into  new  channels;  and  we  fear  that 
prices  will  mount  still  higher,  not  because  of  any  disposition  of  the 
steel  makers  to  crowd  up  the  prices,  but  because  of  the  fact  that  the 


PRICE   REGULATION    OF    STEEL.  31 

buyers  will  go  in  and  bid  against  each  other  to  get  the  steel,  and  will 
bid  any  price  to  get  the  steel,  and  force  the  price  up. 

If  a  situation  develops  where  the  Government  fixes  the  price  for 
steel  and  fixes  it  by  agreement,  so  that  it  will  extend  to  the  benefit 
of  the  public  as  well  as  the  Government,  a  question  then  arises  as 
to  whether  any  such  agreement  will  stand  up  under  the  economic 
pressure  of  buyers  who  will  be  bidding  against  each  other,  in  the  ab- 
sence of  legislative  power  and  authority  to  make  it  effective;  that  is 
to  say,  we  found  in  the  news-print  situation,  where  we  entered  prac- 
tically into  an  agreement  with  them,  that  we  w-ould  arbitrate  the 
price  of  news  print  and  would  distribute  the  paper  and  fix  the  price, 
that  after  the  price  was  fixed  at  $2.50,  which  was  a  fair  price,  and 
after  a  large  proportion  of  the  manufacturers  had  agreed  with  us  to 
abide  by  that  price  to  the  general  public,  we  found  that  a  certain 
portion  of  them — a  small  minority — would  not  come  in  and  they  pro- 
ceeded to  sell  their  paper  at  just  as  high  prices  as  the  market  could 
give,  and  they  could  sell  it  all.  It  was.  therefore,  quite  natural  for  a 
man  to  say,  "  I  am  willing  to  be  a  patriot,  but  not  a  goat,  and  if  this 
man  is  going  to  make  a  fortune  for  his  family,  because  he  does  not 
consider  the  public  interest,  why  should  I  hold  the  price  down  to 
$2.50?" 

That,  in  part,  and  principally  because  we  lacked  the  power  and 
authority  to  enforce  the  agreement,  resulted  in  a  failure,  to  the  ex- 
tent it  was  a  failure,  in  that  news  print  paper  situation.  So,  w^ith 
steel,  I  fear  that  if  any  voluntary  agreement  is  made  to  protect  the 
public  on  the  same  basis  as  the  Government  is  protected,  as  to  the 
price,  the  economic  pressure,  and  the  pressure  of  human  nature  will 
disintergrate  that,  in  a  short  time,  and  bring  about  still  higher  prices 
for  the  public.  I  think  we  are  all  in  accord,  in  the  commission,  on  the 
proposition  that  to  bring  any  substantial  permanent  relief  to  the  pub- 
lic on  prices  of  this  kind,  that  it  is  necessary  that  some  agency  should 
be  clothed  with  power  and  authority  to  make  their  determination 
effective,  so  as  to  bring  relief  to  the  general  public. 

Senator  Pomerene.  I  want  to  follow  this  inquiry  just  a  little  fur- 
ther. A  moment  ago  you  made  the  statement  that  some  manufac- 
turer had  said  that  he  could  pass  on  the  cost  to  the  consumer :  that 
he  was  more  interested  apparently,  from  your  statement,  in  stabiliz- 
ing the  prices  than  to  know  exactly  what  the  price  was — more  inter- 
ested in  stabilized  prices  than  in  lower  or  higher  prices.  I  have  a 
letter  from  the  Taplin-Rice-Clerkin  Co.,  of  Akron,  Ohio,  who  are 
\ery  large  manufacturers  of  stoves,  furnaces,  and  ranges,  and  Mr. 
Clerkin,  who  signs  the  letter,  gives  prices  here  of  his  raw  material 
for  1915  and  1917.  For  instance,  pig  iron,  1915.  $15  per  ton.  and  in 
1917,  $52  to  $55  per  ton;  galvanized  iron,  in  1915.  $54  per  ton;  in  1917, 
$220  per  ton;  planished  iron  (range  stock)  in  1915,  $G2  per  ton;  in 
1917,  $240. 

In  discussing  the  effect  of  this  he  says — and  I  am  going  to  ask  per- 
mission to  put  this  entire  letter  in  the  record  [reading]  : 

How  will  the  business  interests  of  the  country  be  kept  running  full  blnst  to 
keep  the  noncombatants.  employees,  and  producers  unless  the  manufnetnrers 
can  sell  their  finished  pi-oduct  at  reasonable  iiriees,  if  prices  are  prohibitive? 
How  can  they  do  this?  People  will  not  buy.  In  our  own  case  we  are  obliged  to 
name  prices  that  we  consider  almost  prohibitive  and  beyond  the  rcvach  of  the 
wage  earner  to  pay  for  by  reason  of  ourselves  being  obliged  to  pay  so  much 
for  the  raw  product. 


32  PRICE   REGULATION    OF   STEEL. 

And  another  paragraph  here,  that  is  very  interesting  as  bearing 
upon  this  same  subject,  is  this  [reading]  : 

Why  were  they  [meaning  the  railroads]  refused  their  15  per  cent  increase  on 
freight  rates?  I  believe  tlie  Interstate  Commerce  Commission  decided  that  their 
earnings  of  the  past  year  did  not  justify  additional  toll  from  the  public.  This  is 
good  argument,  and  I  appeal  to  you  that  you  apply  the  same  .-irgunient  against 
the  metal,  coal,  and  coke  companies  as  \Aas  used  against  the  railroad  companies, 
etc. 

And  it  presents  the  situation  so  forcefully  of  those  manufacturers 
Avho  are  dependent  upon  iron  and  steel  for  their  raw  material  that  I 
feel  justified  in  inserting  this  letter  into  the  record,  and  my  thought 
was  that  what  he  says  there  with  respect  to  the  manufacturers  of  fur- 
naces and  stoves  in  reference  to  the  increased  cost  of  their  raw  mate- 
rial will  apply  to  every  other  manufacturing  industry  which  is  de- 
pendent on  iron  and  steel,  as,  for  instance,  the  manufacturers  of  agri- 
cultural implements,  of  hardware  specialties,  the  manufacturers^  of 
tools,  and  other  like  articles,  and  it  was  because  of  that  fact  that  I 
felt  vastly  more  interested  in  the  subject  of  price  fixing  than  for 
any  other  reason. 

Commissioner  Davies.  I  know  that  Commissioner  Murdock 

The  Chairman,  Have  you  finished  your  statement? 

Commissioner  Davies.  Yes,  sir.  I  think  Commissioner  Murdock 
has  given  a  great  deal  of  thought  to  this  matter,  and  perhaps  a  state- 
ment from  him  would  be  interesting. 

Commissioner  Muroock.  Senator,  it  is  lunch  hour,  and  I  could  not 
add  anything  to  what  Mr.  Davies  has  said.  He  has  said  it  excel- 
lently :  and  if  I  may  be  pennitted  a  single  word,  I  would  say  that  I 
wish  to  convey  the  impression — which  I  have  gained  during  the  last 
few  days  I  have  been  on  the  Trade  Commission — to  the  Senators  that 
this  situation  is  going  to  become  increasingly  difficult  because  of 
the  Government  demand  for  a  rather  fixed  steel  supply,  in  that  it  is 
going  to  affect  disadvantageoush"  in  increasing  degree  the  private 
purchasers  of  steel,  and  the  sooner  action  can  be  had  to  remedy  that 
situation  the  better,  and  I  think  it  takes  legislative  action  for  that. 

Commissioner  Davies.  There  is  one  suggestion  with  reference  to 
the  form  of  the  resolution  that  Mr.  Fairchild  has  suggested  to  me,^ 
and  I  wish  Mr.  Fairchild  could  state  that 

Senator  Pomerexe.  If  we  are  going  into  the  legal  features  of  that, 
had  we  not  better  adjourn  for  the  lunch  hour? 

Senator  Cummins.  I  think  so.  There  is  a  good  deal  on  the  ques- 
tion, on  the  matter  of  the  form  these  powers  should  take:  whatever 
powers  we  may  give. 

Senator  Pomerene.  Mr.  Davies  has  testified  with  respect  to  the 
cost  of  production  of  iron  ore  and,  as  bearing  out  his  statements,  I 
would  like  to  have  the  views  of  the  iron  and  steel  men  themselves  in 
the  record.  I  have  here  a  prospectus  issued  by  the  Bird  Coal  &  Iron 
Co.,  with  offices  at  206  South  Wabash  Avenue.  Chicago,  111.,  and  with 
plant  at  Talladega,  Ala.  Mr.  Bird  is  described  here  as  a  man  who 
has  had  very  large  experience  in  the  iron  business  in  Ohio,  at  various 
mills  at  Ironton,  Ohio,  and  here  is  his  letter,  in  which  he  is  soliciting 
the  sale  of  stcck,  etc.,  and  he  says  in  this  correspondence  that  pig 
iron  can  be  produced  at  from  $12  to  $14  a  ton. 

Senator  Cummins.  What  date  is  the  letter? 


PRICE   REGULATION    OF    STEEL.  33 

Senator  Pomerene.  It  is  in  June,  July,  and  August  of  this  year. 
There  are  several  of  them  here,  and  I  want  to  introduce  these  several 
letters. 

(The  correspondence  referred  to  above  is  here  printed  in  full,  as 
follows:) 

[Bird  Coal  &  Iron  Co.  Coal,  coke,  iron  ore,  pig  iron.  Blast-furnace  ore  and  coal,  Mines 
and  coke  ovens  loca  ed  at  Talladega,  Ala.  Address  reply  to  the  company  at  206  South 
Waliash  Avenue,   Chicago.] 

.Tune  20.  1917. 
E.  C.  Merwin, 

Massillon,  Ohio,  .lime  2.i.  I'JIl. 

Gentlemen  :  You  know  of  the  tremendous  profits  being  made  in  the  produc- 
tion of  pis  iron,  because  you  are  payinji  a  hijrher  price  for  it  to-day  than  ever 
before,  and  becau.se  you  have  bou^iit  \n'A  iron  at  a  cost  of  from  one-fourth  to 
one-third  of  what  you  are  now  i)ayinj^  for  it. 

You  tan  participate  in  tlie  profits  now  being  made  in  tins  business  by  being 
a  part  owner  of  the  business  and  besides  have  the  advantage  of  rilicai/s  bcinf/ 
able  to  get  (Iclircries  of  i>i<i  iron  irlicii  i/oii  iraiit  thciii  from  the  roniixnni  in 
irhich  you  are  interested. 

Thus  you  participate  in  two  protirs — one  from  the  standpoint  of  part  owner 
in  purchasing  yoiu"  I'aw  material  free  from  your  own  company  and  the  other 
your  normal  i)i-otir  from  the  operation  of  your  foundry  l>usiness. 

It  is  very  seldom,  indeed,  that  you  have  an  o]iportunlty  t<»  get  all  yoin*  origi- 
nal investment  back  in  less  than  a  year  and  also  continue  to  participate  from 
year  to  year  in  the  profits  which  you  will  receive  from  tinu>  to  time  from  a 
bonus.  The  l)onus  interest  which  y<ni  will  receive  for  nothing  will  undoubtedly 
yield  you  a  greater  return  th.-'u  the  .average  conservative  investment  of  funds. 

Look  over  the  inclosed  circular  cnrefully  and  confirm  the  statements  we  make. 
Any  connnerci;d  agency  will  give  you  a  repoi't  that  will  verify  the  basic  facts 
un''erlying  oni-  proposition.     The  proposal  is  this: 

We  are  issuing  .SIOO.OUO  7  per  cent  preferred  stock,  refirable  during  IDIS.  at  a 
liremium  of  .'t^^.")  per  share,  or  .$12.i.  You  can  buy  the  preferred  stoclv  at  par  to- 
day, and  with  each  share  of  preferred  that  yon  buy  we  shall  permit  you  to  buy 
a  half  share  of  common  stock  for  $25,  or  just  one-half  its  par  value. 

We  purpose  to  t:ike  up  the  ])referred  stock  during  1918  at  .*t;i2o,  which  gives 
you  back  all  your  money,  and  you  retain  your  luvlf  share  of  common  stock, 
which  will  a.ssure  you  a  permanent  interest  in  the  business  and  a  continuous 
liarticipation  in  the  profits  of  operatiiai. 

Having  purchased  foundry  iron  for  as  low  as  $12  or  .$1.3  a  ton  during  the 
jjast  12  months,  you  know  that  there  nmst  be  a  tremendous  profit  in  it  at  the 
prese-it  market  iirice  of  approximately  $40  :;  ton.  On  a  production  of  6,(K)(»  tons 
a  month — the  capacity  of  our  furnace,  which  will  be  ready  to  go  in  blast  within 
six  or  eight  week.s — you  can  easily  figure  what  the  profits  will  be  when  we  can 
produce  the  iron  for  aiiiiroximately  $10  a  t(m  and  sell  it  at  $40  a  ton.  A 
l)rofit  of  $1.")0,(K)0  a  mcmth  is  well  within  reason,  and  on  a  cai»italization  of 
$1,100,000  will  be  in  excess  of  100  per  cent  profit  on  the  entire  issue  of  eonnnon 
stock  of  $1,000,000. 

Are  you  in  the  market  for  iron  nowV 

Would  yini  like  to  come  in  with  us  and  particip.-ite  in  the  profits? 

We  expect  that  this  issue  will  be  taken  up  (pii<'kly.  First  come  will  get  the 
earlier  m;  turit  es  with  return  of  money  that  much  sooner. 

We  should  like  to  hear  from  you  in  any  event,  and  are  inclosing  a  blank  fornj 
of  sub.scription.  which  you  may  send  in  at  once,  and  we  will  hold  it  for  10 
days,  subject  to  any  investigation  ycni  may  care  to  malce.  with  the  understand- 
ing that,  if  the  facts  are  not  in  strict  accordance  with  tlie  inclostHl  folder,  you 
may  withdraw  your  suliscription  at  once. 

If  you  prefer,  you  may  wii-e  at  our  expense  and  follow  the  subscription  by 
letter,  and  it  will  be  entered  in  the  order  in  which  it  is  received. 

Let  us  hear  from  yon  at  once. 
Very  truly,  yours. 


P.  S. — Liberty  bonds  will  be  taken  at  par. 
14774 — 17— PT  1 3 


Bird  ('o.xl  &  Iron  Co.. 
Glen  C.  Bull, 
!/>('  I'resident  and  Treasurer. 


34  PEICE    EEGULATION    OF    STEEL- 

July  9.  1917. 
The  IUkd  Coai,  (S:  IroiN  C'o., 

Chicago,  III. 
Gentlemen  :  We  have  your  several  oircubirs  concerning  stock  in  tlie  Bird 
Coal  &  Iron  Co. ;  and  while  we  are  interested  in  a  definite  source  of  supply, 
owins;  to  the  fact  that  we  use  about  20,000  tons  of  pig  iron  per  annum,  we  feel 
that  your  estimate  of  profit  is  rather  too  high  under  loresent  conditions.  It 
hardly  seems  reasonable  to  us  that  iron  can  be  made  for  $12  per  ton  when  the 
asking  price  for  coke  runs  from  $12  to  $15  per  ton  at  Connellsville.  Of  course, 
if  no  allowance  is  made  for  tlie  value  of  the  coal  and  ore  lands  and  only  the 
charge  of  manufacturing  is  figured  on — that  is,  simply  the  cost  of  labor  in  the 
nianufacl  ure  of  pig  iron — tlien  the  apparent  i>rofit  would  be  very  satisfactoi'y. 

Can  you  send  us  a  more  detailed  report  showing  the  output  of  the  furnace 
under  jjresent  conditions,  what  you  expect  to  make  after  the  improvements  have 
been  made,  as  well  as  tlie  cost  vuuler  normal  conditions  prior  to  the  war  and 
at  the  present  with  the  increased  price  of  labor? 

The  writer  had  hoped  tt)  be  in  Chicago  and  had  expected  to  stop  in  to  see 
you,  but  was  called  East,  and  it  is  impossible  now  to  say  when  the  Chicago 
*  visit  will  be  made. 

If  you  can  give  us  a  more  detailed  and  definite  idea  of  the  output  and  cost — 
that  is,  showing  liow  the  co.st  is  figured,  whether  the  value  of  the  coal  and  ore 
lands  is  considered  as  part  of  the  investment,  as  well  as  overhead  expeu.s&s^ — 
we  will  appreciate  it  very  much. 

Thanking  you  in  advance  for  the  favor  of  an  early  reply,  we  are, 
Yours,  respectfully, 

The  C.  S.  Bell  Co., 
By  C.    E.    Bell,    President. 


[E.  J.  Bird,  president.  Glen  C.  Bull,  vice  president  and  treasurer.  F.  T.  McKay,  secre- 
tary. Bird  Coal  &  Iron  Co.,  producers  of  pig  iron,  coal,  and  coke.  Furnace,  Talla- 
dega, Ala.  General  offices,  Chicago,  IIL  Reply  to  ihis  communication  should  be  ad- 
dressed to  the  office  at  Chicago.] 

August  7,  1917. 
Mr.  C.  E.  Bell, 

President  the  C.  /S'.  Bell  Co.,  Hillsboro,  Ohio. 

Dear  Mr.  Bell:  The  writer  has  been  out  of  the  city  for  the  past  month  and 
lias  just  had  an  opportunity  of  answering  your  letter  of  July  9. 

I  note  wh.it  you  say  regarding  our  estimate  of  profits.  As  stated  in  our 
'Circular,  we  have  our  own  coal  and  our  own  ore.  Our  only  cost  is  labor  cost. 
It  is  true  that  in  our  calculations  we  did  not  write  off  anything  for  depreciation 
of  raw  material.  We  did  not  do  this  for  the  reason  that  we  have  sufficient  red 
and  brown  ore  to  take  care  of  our  requirements  for  perhaps  a  generation  or 
more  and  coal  sufficient  for  at  least  l-")  or  20  years. 

In  other  words,  we  were  trying  to  present  in  this  circular  our  ability  to  repay 
the  money  secured  on  our  preferred  stock  issue,  thinking  that  security  of  the 
investment  took  preference  over  anything  else  in  the  investor's  mind,  which 
it  should. 

It  is  impossible  for  me  to  send  you  a  more  detailed  report  showing  output 
of  this  furnace  prior  to  its  rehabilitation.  We  have  increased  the  capacity  of 
the  furnace  very  materially,  and  on  the  percentage  of  metallic  iron  in  the  ore 
which  we  will  use,  we  feel  very  confident  that  our  capacity  will  be  6,000  tons 
a  month,  or  209  tons  a  day.  The  stack  is  17*  feet  by  80  feet,  and  by  using  a 
mixture  of  ores  that  will  run  approximately  44  per  cent  of  metallic  iron,  we 
feel  that  200  tons  will  not  miss  it  very  much. 

This  is  the  opinion  of  our  president,  Mr.  E.  J.  Bird,  who  has  had  25  years 
experience  in  making  pig  iron  and  who,  during  that  time,  lias  been  unusually 
successful. 

We  figure  our  labor  cost  per  ton  of  iron  at  $2.  We  figure  mining  our  brown 
ore  for  from  $1  to  $1.25,  which  will  be  very  materially  reduced  as  soon  as  the 
steam  shovel  is  in  operation,  which  will  be  within  the  next  week  or  10  days, 
and  that  our  red  ore  can  be  mined  and  put  on  the  cars  for  less  than  $1.25. 
We  are  putting  coal  on  the  cars  for  less  than  $1.25  a  ton,  to  which  should  be 
added  38  cents  for  freight.  It  takes  1^  tons  of  coal  for  1  ton  of  coke,  and  we 
expect  to  use  1.33  tons  coke  for  each  ton  of  pig  iron  produced. 

These  figures  will  enable  you  to  arrive  at  a  cost  considerably  under  $15. 


PRICE   REGULATION   OF   STEEL.  35 

As  you  know,  the  price  for  iron  the  last  half  of  this  year  and  the  first  half 
of  next  is  in  excess  of  $45,  f.  o.  b.  furnace. 

I  should  like  vei-y  much  to  have  you  drop  in  and  see  me  any  time  you  come  to 
Chicago.  Perhaps  we  could  figure  out  something  that  would  Interest  you  very 
much. 

I  shall  also  be  glad  to  hear  from  you  further. 
Very  truly,  yours, 

Glen  C.  Bull, 
Vice  President  and  Treasurer,  Bird  Coal  d  Iron  Co. 

The  Chairman.  I  wish  to  inquire  if  there  is  anybody  here  who 
wishes  to  appear  on  behalf  of  the  steel  or  iron-ore  interests?  If  not, 
we  will  take  a  recess  until  half  past  2. 

(Whereupon  a  recess  was  taken  until  2.30  o'clock  p.  m.  of  the  same 
•day.) 

AFTER  RECESS. 

The  hearing  was  resumed  at  the  expiration  of  the  recess,  at  2.30 
o'clock  p.  m.,  Hon.  Francis  G.  Newlands  presiding. 

The  Chairiman.  Mr.  Fairchild,  we  will  be  glad  to  hear  from  you  as 
to  the  form  of  the  proposed  legislation. 

STATEMENT  OF  MR.  ARTHUR  W.  FAIRCHILD. 

Mr.  Fairciiild.  I  regret,  Mr.  Chairman,  that  I  did  not  know  until 
this  morning  of  the  meeting,  and,  therefore,  what  little  I  have  to  say 
may  not  be  said  in  a  very  orderly  manner. 

The  Chairman.  Will  you  first  please  state  your  occupation  and 
residence? 

Mr.  Fairchild.  I  am  an  attorney  at  law,  from  Milwaukee,  now 
with  the  Federal  Trade  Commission,  in  special  work  which  has  had 
to  do,  to  some  extent,  with  the  steel  investigation  and  matters  inci- 
dental to  it. 

The  question  which  Mr.  Davies  had  me  particularly  examine  I 
am  not  sure  concerns  this  committee  or  concerns  Congress  so  much 
as  it  does  the  executive  department,  but  it  might  be  well  if  the  com- 
mittee had  before  it  that  question  in  framing  the  law. 

Considerable  doubt  has  been  expressed  by  lawyers,  particularly 
those  who  have  given  the  matter  any  thought,  as  to  the  effect  of  the 
fifth  amendment  upon  legislation  of  this  kind;  that  is,  that  part  of 
the  fifth  amendment  which  requires  the  payment  of  just  compensa- 
tion for  private  property  taken  for  public  use.  The  query  has  been 
made  as  to  what  will  be  the  result  if  the  Government  should  see  fit 
to  take  over  the  steel  plants  or  should  see  fit  to  commandeer,  by 
})roc?ss  provided  in  the  law,  viz,  the  creation  of  a  buying  and  selling 
agency,  all  the  output  of  a  plant,  buying  it  for  the  Government 
and  reselling  it  again.  Let  us  suppose,  for  instance,  that  under  the 
Lever  x\ct  the  Government  should  see  fit  to  take  over  the  coal  output 
of  the  country  and  distribute  it  by  purchasing  and  selling  agencies, 
which  say  to  the  owners  of  the  mines,  "  We  will  pay  you  $2  per  ton 
for  your  coal,"  and  the  coal  should  be  purchased  at  that  price  and 
resold  at  that  price  plus  a  margin  of  profit.  Query:  May  the  pro- 
ducer with  any  reason  claim  that  this  $2  does  not  represent  an  ade- 
quate compensation  in  the  light  of  the  existing  conditions?  Can  he 
say,  "We  had  a  market  for  our  coal  at  very  much  higher  prices; 


36  PRICE   REGULATION    OF   STEEL. 

we  had  a  demand  far  exceeding  the  supply ;  we  had  economic  condi- 
tions which  would  doubtless  result  in  still  higher  prices,  and  the 
GoA-ernment  has  paid  us  onl}'  $2  for  our  coal.  We  are  entitled  to  the 
difference "  ?  In  other  words,  is  there  a  question  or  a  possibility 
that  the  Government  may  be  called  upon,  at  the  end  of  the  war,  to 
pay  to  the  owners  of  the  plants,  or  the  owners  of  property  com- 
mandeered, a  much  larger  amount  than  the  price  which  has  been  fixed 
by  the  Executive? 

There  are.  of  course,  two  pertinent  powers  of  government ;  there 
it>  the  national  police  power,  or  perhaps  more  properly  the  war 
power,  and  the  power  of  eminent  domain  which  permits,  in  the  one 
case,  an  impairment  of  property  and  even  its  destruction  for  the  com- 
mon good,  and  the  other  which  permits  the  Government  to  take  it 
for  its  own  use  upon  payment  of  an  adequate  price.  Police  power 
and  the  power  to  take  have  been,  through  all  the  cases,  A'ery  clearly 
differentiated.  If  the  exercise  of  power  is  the  exercise  of  a  police 
power,  which  seems  akin  to  the  war  power,  it  may  result  in  great 
impairment  of  property  and  may  result,  in  cases,  in  total  destruc- 
tion of  property,  but  for  that  impairment  or  destruction  the  Govern- 
ment is  not  obliged  to  recompense.  On  the  other  hand,  if  the  Gov- 
ernment "takes"  property  and  appropriates  it  to  its  own  use.  then> 
under  the  fifth  amendment,  it  is  obligsd  to  pay  just  compensation. 

So,  the  question  is,  for  the  executive,  primarily,  and  not  for  the 
legislative  department.  What  steps  may  be  taken  without  complicat- 
ing the  situation:  without  injecting  into  it  further  than  nece<=sary 
the  possibilHy  of  the  Government  later  being  obliged  to  pay  larger 
sums  than  the  sums  fixed  for  the  property  and  plants. 

Under  this  act,  as  I  view  it,  there  ai-e  four  possible  methods  which 
may  be  employed:  Fi'-st,  the  price-fixing  method;  second,  the  regula- 
tion method — regulation  of  production,  distribution,  and  apportion- 
ment ;  third,  the  commandeering  of  plants  upon  paying  a  fair  rental : 
and  fourth,  the  pu"chase  of  the  output,  really  a  pooling  of  it,  and 
the  resale  to  the  public  generally. 

Briefly,  I  may  say  that  it  has  seemed  to  me,  with  such  short  con- 
sideration as  I  have  been  able  to  give  it,  that  price  fixing  and  resm- 
lation  would  not  be  deemed  a  "taking"  of  property  under  the  fifth 
amendment:  that  it  would  be.  assuming  the  exigency,  within  the 
power  of  the  Government  to  fix  the  price  and  to  regulate  the  pro- 
duction and  shipment  and  distribution  and  apportionment  of  prod- 
ucts without  taking  the  property  in  a  constitutional  sen-e. 

On  the  other  hand,  if  the  Government  should  see  fit  to  actually 
commandeer  the  plant,  or  actually  commandeer  the  output,  then  it 
would  seem  a  taking,  under  the  Constitution,  which  would  require 
just  compensation.  Of  course,  in  estimating  that  just  compensation, 
if  the  Government  should  see  fit  to  adopt  either  of  the  two  latter 
courses,  there  must,  if  the  rules  applicable  to  eminent  domain  should 
obtain,  probably  be  taken  into  consideration  all  of  the  elements  that 
enter  naturally  into  a  determination  of  an  adequate  compensation. 
On  the  one  hand,  there  would  be  the  present  h^gh  prices,  the  over- 
demand,  or  demand  exceeding  the  supply,  and  the  possibility  or 
probability  of  future  enhanced  prices:  but,  on  the  other  hand,  there 
should  be  taken  into  account  the  economic  exigency,  the  possibility 
of  a  disruption  of  the  industry,  because  of  these  war  conditions,  and 
the  whole  possible  ultimate  effect  of  these  conditions  upon  the  in- 


PRICE  REGULATION  OF  STEEL.  37 

•dustry  which,  of  course,  in  the  end  but  for  the  Government  action, 
might  result  in  disaster  to  it. 

So,  I  take  it,  that  if.  short  of  confiscation,  an  administrative 
officer  or  designated  board  should  fix  a  compensation,  a  court  would 
be  verj'  loath  to  alter  that  finding,  because  the  weight  which  must 
be  given  this  or  that  element  is  one  of  fact  or  mixed  law  and  fact,  and 
the  court  ordinarily  does  not  modify  a  finding  which  is  based  upon 
a  disputed  fact.  But  the  question  is  there  nevertheless,  and  the 
executive  officer  or  board  will  naturally  wish  to  avoid  it.  Therefore, 
in  preparing  this  bill  it  would  seem  important  to  have  the  powers, 
-short  of  taking  of  property,  very  accurateh^  defined  and  given. 

I  think  it  is  recognized — 1  am  merely  speaking  personally,  and  not 
at  all  as  representing  the  commission  or  anybody  else — I  think  it  is 
recognized  that  if  results  can  be  <  btained  by  price  fixing  or  by  regu- 
lation those  methods  will  be  adopted  before  the  Government  will 
either  commandeer  the  plant  or  use  the  power  which  is  given  to  turn 
over  to  an  agency  all  of  tlie  product  for  resale  to  the  public.  If  that 
be  true.  then,  it  is  quite  important  that  the  bill  should  give  the 
broadest  possible  power  to  the  P^xecutive  and  the  agency  through 
which  he  acts  to  regulate  the  production,  shipment,  distribution,  and 
apportionment  of  these  products.  A  cursory  reading  of  the  bill 
would  seem  to  me  to  leave  some  doubt  as  to  whether  that  power  is 
broadly  enough  expressed.  Yru  will  notice  on  page  4  that  it  gives 
the  power  to  establish  rules  for  the  regulation  of  and  to  regulate 
methods  of  production,  sale,  shipment,  distribution,  apportionment, 
or  storage  thereof  among  dealers  and  consumers,  domestic  and  for- 
eign, etc.  I  wish  to  suggest  Avhether  it  Avould  not  be  advisable  to 
eliminate  the  words  '"  methods  of  ''  so  that  it  would  read  "  to  regulate 
the  production,  sale,  shipment,  distribution,  and  apportionment."  etc. 
In  other  Avords,  the  regulation  of  merely  the  methods  of  distribution 
and  apportionment  might  not  give  a  sufficient  power  to  direct  pri- 
ority. It  is  a  limiting  phrase,  which  seems  to  add  nothing  and  per- 
haps unwisely  limit  the  ])ower  conferred.  My  personal  view  is  that 
the  important  thing  is  to  place  the  Government  in  a  position  to  direct 
where  products  shall  go  and  at  what  prices. 

Senator  (Vmmixs.  Mr.  Fairchild.  as  I  have  read  the  bill,  it  seems 
to  me  your  suggestion  would  apply  to  some  other  part  of  it  more 
directly  than  to  the  language  you  liave  read  on  page  4.  Tliat  part 
of  the  bill,  beginning  at  the  bottom  of  page  3.  contemplates  that  the 
Government  has  become  the  owner  of  all  the  whole  product,  and  this 
"to  regulate  the  methods  of  production,  shipment,  distribution,  ap- 
portionment, or  storage  thereof.''  etc..  contemplates  a  distribution  of 
the  Government's  own  pre  duct, 

Mr.  Fairchilu.  Senator,  you  are  entirely  right.  I  should  have 
said  page  2  instead  of  page  4.  The  same  language  is  used  at  the  top 
■of  page  2.  There  the  language  is,  *'To  regulate  the  method  of  pro- 
duction, sale,  shipment,  distribution,  apportionment,  or  storage,"  etc. 

You  are  entirely  right:  but  the  same  considerations  would  apply. 
There  should  be  the  liroadest  powers  of  priority,  a  power  to  direct 
where  the  product  shall  go  and  at  what  price:  and  it  would  seem  to 
me  that  the  words  "method  of  might  limit,  perhaps,  that  power. 

There  is  another  thing  that  occurred  to  me:  This  bill,  of  course, 
is  fashioned  after  the  Lever  Act,  and  that  act  provides  for  the  tak- 
ing over  of  plants  and  businesses  of  coal  producers.     The  steel  in- 


38  PRICE   REGULATION    OF   STEEL. 

dustry  differs,  of  course,  radically  from  the  coal  industry,  in  that 
there  are  so  many  different  products  of  the  industry,  and  the  in- 
dustry is  integrated  to  such  an  extent  that  it  really,  in  certain 
instances,  is  a  combination  of  a  very  large  number  of  different 
industries  into  one.  The  language  of  the  bill,  as  it  stands,  might 
be  taken  as  requiring  the  commandeering  of  the  whole  plant  and 
business  of  any  given  company,  if  any  is  to  be. commandeered.  I 
can  conceive  of  a  case  where  the  Government  might  desire  to  take 
over  perhaps  only  a  small  portion  of  the  plants  or  business  of 
particularly  a  highly  integrated  company,  and  my  suggestion  would 
be  to  broaden  out  the  power  conferred  by  inserting  in  line  19,  at  page 
2,  after  the  word  "  appurtenances,"  the  Avords  "  or  any  part,"  so  that 
the  Government  might  take  over  one  branch  of  a  particular  company 
instead  of  being  required  to  take  over  the  entire  thing. 

In  that  same  connection,  there  might  be  on  hand  stores  of  prop- 
erty— accumulated  stores  of  a  product — semifinished  and  finished. 
If  the  word  "  property "  were  inserted  after  "  business,"  it  would 
seem  to  me  to  strengthen  the  act. 

Senator  Pomere>'e.  What  line  is  that? 

Mr.  Fairchild.  Line  19,  after  the  word  "  business." 

Senator  Cummins.  Page  2? 

Mr.  Fairchild.  Yes. 

Senator  Pomerexe.  Wliat  was  your  suggestion? 

Mr.  Fairchild.  Insert,  after  the  word  "  business  "  the  words  "  or 
property." 

Senator  Pomerene.  Is  not  that  included  in  the  word  "plant"? 

Mr.  Fairchild.  I  do  not  know;  there  might  be  a  quibble  over  it. 
It  is  possible  that  it  would  include  stored  property,  but  I  am  not 
sure  that  it  would,  particularly  in  a  case  where  property  might  not 
be  stored  at  the  plant. 

Those  changes  require  numerous  changes  throughout  the  body  of 
the  act.  It  would  take  too  long  to  point  them  out.  Perhaps  I  could 
hand  to  the  chairman  a  copy  of  the  bill  with  interlineations,  so  as 
to  show  what  I  had  in  mind. 

The  Chair:man.  If  you  will  do  that,  we  will  insert  it  in  the  record. 

Mr.  Fairchild.  I  shall  be  glad  to  do  it. 

(The  copy  of  the  bill  referred  to  is  as  follows,  the  proposed  changes 
appearing  in  italics:) 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United  States  oj  America 
in  Congress  assembled,  That  by  reason  of  the  existence  of  a  state  of  war  it  is  essential 
to  the  national  security  and  defense  for  the  successful  prrsecuticn  of  the  war  and  for 
the  support  and  maintenance  of  the  Army  and  Navy  to  assure  an  adequate  supply  and 
equitable  distribution  at  reasonable  prices  and  to  facilitate  the  movement  of  iron 
ore,  iron,  steel,  and  their  products,  and  because  therecf  the  President  of  the  United 
States  shall  be,  and  he  is  hereby,  authorized  and  empowered,  whenever  and  wherever 
in  hie  judgment  necessary  for  the  efFcient  pn  secutir  n  of  the  war  and  fcr  the  purposes 
aforesaid,  to  fix  the  price  of  iron  ore,  iron,  steel,  and  their  products  wherever  and  when- 
ever sold,  either  by  producer  or  dealer,  to  establish  rules  for  the  regulatirn  of  and  to 
regulate  the  metVod  of  production,  sale,  shipment,  distribution,  apportionment,  or 
storage  thereof  among  dealers  and  consumers,  domestic  or  foreign.  Said  authority 
and  power  may  be  exercised  by  him  in  each  case  through  the  agency  of  the  Federal 
Trade  Commission  during  the  war  or  for  such  part  of  said  time  as  in  his  judgment  may 
be  necessary. 

That  if,  in  the  opinion  of  the  President,  any  such  producer  or  dealer  fails  or 
neglects  to  conform  to  such  prices  or  regulations,  or  to  conduct  his  business  efficiently 
under  the  regulations  and  control  of  the  President  as  aforesaid,  or  conducts  it  in  a 
manner  prejudicial  to  the  public  interest,  then  the  President  is  hereby  authorized 


PRICE   KEGULAllO^'    OF    STEEL.  39 

and  empowered  in  every  such  case  to  requisition  and  take  over  the  plant,  business, 
or  property,  and  all  appurtenances  or  any  part  thereof  belonging  to  or  operated  by  such 
producer  or  dealer  as  a  going  concern,  and  to  operate  and  handle  or  cause  the  same  to 
be  operated  and  handled  in  such  manner  and  through  such  agency  as  he  may  dkect 
during  the  period  of  the  war,  or  for  such  part  of  said  time  as  in  his  judgment  may  be 
necessary. 

That  any  producer  or  dealer  whose  plant,  business,  property,  and  appurtenances 
shall  have' been  requisitioned  or  taken  over  by  the  President  fhall  be  paid  a  just 
compensation  for  the  use  thereof  during  the  period  that  the  same  may  be  requisi- 
tioned or  taken  over  as  aforesaid,  which  compensation  the  President  shall  fix  or  cause 
to  be  fixed  by  the  Federal  Trade  Commission. 

That  if  the" prices  so  fixed,  or  if,  in  the  case  of  the  taking  over  or  requisitioning  of 
the  plant,  business,  property,  and  the  appurtenances,  or  any  part  thereof ,  oi  any  such 
producer  or  dealer,  the  compensation  therefor  as  determined  by  the  provisions  of  this 
Act  be  not  satisfactory  to  the  person  or  persons  entitled  to  receive  the  same,  such 
person  shall  be  paid  seventy-five  per  centum  of  the  amount  so  determined,  and  thall 
be  entitled  to  sue  the  United  States  to  recover  such  further  sum  as,  added  to  said 
seventy-five  per  centum,  will  make  up  such  amount  as  will  be  just  compensation  in 
the  manner  provided  by  section  twenty-four,  paragraph  twenty,  and  section  one 
hundred  and  forty-five  of  the  Judicial  (ode. 

While  operating  and  handling,  or  causing  to  be  operated  and  handled,  any  such  plants 
or  business  and  appurtenances  thereof,  the  President  is  authorized  to  prescribe  such 
regulations  as  he  may  deem  essential  for  the  emplojonent,  control,  and  compensation 
of  the  employees  necessary  to  conduct  the  same. 

Or  if  the  President  of  the  United  States  shall  be  of  the  opinion  that  he  can  thereby 
better  provide  for  the  common  defense  and  the  purposes  aforesaid  and  whenever,  in 
his  judgment,  it  shall  be  necessary  for  the  successful  prosecution  of  the  war,  then  he  is 
hereby  authorized  and  empowered  to  reciuire  any  or  all  producers  of  iron  ore,  iron, 
steel,  and  their  products  in  any  section  of  the  United  States,  or  in  the  entire  United 
States,  to  sell  their  products  or  designated  portions  thereof  only  to  the  United  States 
through  an  agency  to  be  designated  by  the  Pressident,  such  agency  to  regulate  the 
resale  of  and  to  resell  such  ii'on  ore,  iron,"  steel,  and  their  products  or  designated  portions 
thereof  and  to  regulate  and  fix  the  prices  thereof,  and  to  establish  rules  for  the  regulation 
of  and  to  regulate  the  ffteiheele-e*  production,  shipment,  distribution,  apportionment, 
or  storage  thereof  among  dealers,  consumers,  domestic  or  foreign,  and  to  make  pay- 
ment of  the  purchase  price  thereof  to  the  producers  thereof,  or  to  the  person  or  persons 
legally  entitled  to  said  payment. 

That  within  fifteen  days  after  notice  from  the  agency  so  designated  to  any  producer 
of  iron  ore,  iron,  steel,  and  their  products  that  his  or  its  output  or  portions  thereof  is 
to  be  so  purchased  by  the  United  States  as  hereinbefore  described,  such  producer 
shall  cease  sales  or  shipments  of  said  product  upon  his  own  account  and  shall  transmit 
to  such  agency  all  orders  received  and  unfilled  or  partially  unfilled,  showing  the 
exact  extent  to  which  shipments  have  been  made  thereon,  and  thereafter  all  ship- 
ments shall  be  made  only  on  authority  of  the  agency  designated  by  the  President, 
and  thereafter  no  such  producer  shall  sell  any  of  said  products  except  to  the  United 
States  through  sucli  agency,  and  the  said  agency  alone  is  hereby  authorized  and 
empowered  to  purchase  during  the  continuance  of  the  requirement  the  output  of 
such  producers. 

That  the  prices  to  be  paid  for  such  products  so  purchased  shall  be  based  upon  a 
fair  and  just  profit  over  and  above  the  cost  of  production,  including  proper  mainten- 
ance and  depletion  charges,  the  reasonableness  of  such  profits  and  cost  of  production 
to  be  determined  by  the  Federal  Trade  Commission,  and  if  the  prices  fixed  by  the 
said  commission  of  any  such  product  purchased  by  the  United  States  as  hereinbefore 
described  be  unsatisfactory  to  the  person  or  persons  entitled  to  receive  the  same, 
such  person  or  persons  shall  be  paid  seventy-five  per  centum  of  the  amount  so  deter- 
miiied  and  shall  be  entitled  to  sue  the  United  States  to  recover  such  further  suin  as 
added  to  said  seventy-five  per  centum  will  make  up  such  amount  as  will  be  just 
compensation  in  the 'manner  pro\'ided  by  section  twenty-four,  paragraph  twenty, 
and  section  one  hundred  and  forty-five  of  the  Judicial  Code.  All  such  products  so 
sold  to  the  United  States  shall  be 'sold  by  the  United  States  at  such  uniform  prices, 
quality  considered,  as  may  be  practicable  and  as  may  be  determined  by  said  agency 
to  be  just  and  fair. 

Any  moneys  received  by  the  United  States  for  the  sale  of  any  such  iron  ore,  iron, 
steel,'and  their  products  may,  in  the  discretion  of  the  President,  be  used  as  a  revolving 
fund  for  further  carrying  out  the  purposes  of  this  section.  Any  moneys  not  so  used 
shall  be  covered  paid  into  the  Treasury  as  miscellaneous  receipts. 

That  when  directed  by  the  President,  the  Federal  Trade  Commission  is  hereby- 
required  to  proceed  to  make  full  inquiry,  giving  such  notice  as  it  may  deem  practi- 


40  PRICE    REGULATION    OF    STEEL. 

cable,  into  the  cost  of  producing  under  reasonably  efficient  management  at  the  various 
places  of  production  the  following  commodities,  to  wit:  Ircn  ore,  ircn,  steel,  and  their 
products. 

The  books,  correspondence,  records,  and  papers  in  any  way  referring  to  transactions 
of  any  kind  relating  to  the  mining,  prcducticn,  sale,  shi  went  (X  distribiti'n  of  all 
producers  or  other  persons  whose  iron  ore,  ircn,  steel,  cr  their  pn  di  cts  have  or  may 
become  subject  to  this  act,  and  the  books,  correspcndence,  records,  and  papers  of 
any  person  appljdng  for  the  purchase  of  ircn  ore,  iron,  steel,  or  their  products  from  the 
United  States  shall  at  all  times  be  subject  to  investigation  by  the  said  agency,  and 
such  person  or  persons  shall  promptly  furnish  said  a  ency  any  data  relating  to  the 
business  of  such  person  or  persons  which  said  agency  may  call  for,  and  said  agency  is 
hereby  authorized  to  procure  information  with  reference  to  the  business  of  such  pro- 
ducers and  the  customers  therefor  in  the  manner  provided  for  in  sections  six  and  nine 
of  the  act  of  Congress  approved  September  twenty-sixth,  nineteen  hundred  and 
fourteen,  entitled  'An  act  to  create  a  Federal  Trade  Commission,  to  define  its  powers 
and  duties,  and  for  other  purposes,"  and  said  agency  is  hereby  authoriz(d  and 
empowered  to  exercise  all  the  powers  granted  to  the  Federal  Trade  Commission  by 
said  act  for  the  carrying  out  of  the  purposes  of  this  act. 

Having  completed  its  inquiry  respectirg  any  conmodity  in  any  locality  it  shall, 
if  the  President  has  decided  to  fix  the  prices  at  which  any  such  commodity  shell  be 
sold  by  producers  and  dealers  generally,  fix  and  publish  n.aximum  prices  for  both 
producers  and  of  dealers  in  any  such  commodity,  wliich  maximum  prices  shall  be 
observed  by  all  producers  and  dealers  until  further  action  thereon  is  taken  by  the 
commission. 

In  fixing  maximum  prices  for  producers  the  commi-sion  shall  allow  the  cost  of  pro- 
duction, including  the  expense  of  operation,  meintenance,  depreciation,  and  deple- 
tion, and  shall  add  thereto  a  just  and  reasonsble  profit. 

In  fixing  such  prices  for  dealers  the  commission  shall  allow  the  cost  to  the  dealer 
and  shall  add  thereto  a  just  and  reasonable  sum  for  his  profit  in  the  transaction. 

any  contract  in  which  pri^€ e-ai=e -44*t  A-^  ade-i*i -« eed-fak^i-pfier  to  the-esra^isl-  fiftefiS 
and  publication-e^-fflajtiffit:ftt-pficee-by-i-hfe-ct  e.fiaieeieftT 

W  hoeA'er  shall,  with  knowledge  that  the  prices  ol  any  such  commodity  have  been 
fixed  as  herein  provided,  ask,  demai  d,  or  receive  a  higher  price,  cr  whoever  shall, 
with  knowledge  that  the  regulatioiis  have  been  prescribed  as  heri-in  proA'ic4ed,  violate 
or  refuse  to  conform  to  any  of  the  same,  shall,  upon  conviction,  be  pui  i  hed  by  a  fine 
of  not  more  than  $5,000  or  by  impriionment  for  not  more  than  two  years,  or  both. 
Each  independent  transaction  shall  constitute  a  separate  offense. 

Nothing  in  this  section  shall  be  construed  as  restricting  or  modifying  in  any  manner 
the  right  the  Government  of  the  Urited  States  may  have  in  its  own  behalf  or  in  behalf 
of  any  other  Governm,ent  at  w^ar  with  Germany  to  purchase,  requisition,  or  take  over 
any  such  commodities  for  the  equipment,  maintenance,  or  support  of  armed  forces 
at  any  price  or  upon  any  terms  that  may  be  agreed  upon  or  otherwise  lawfully 
determined. 

Mr.  Fairchild.  There  is  one  other  thing  that  occurs  to  me.  and 
that  is,  what  is  meant  by  the  phras?,  ''  iron,  iron  ore,  steel,  and  their 
products."  Of  course,  that  is  a  broad  designation,  and  probably  it 
would  include  products  fabricated  down  to  the  last  point  of  fabri- 
cation. There  are  numbers  of  steel  products,  I  am  informed,  that 
are  combination  products.  Take,  for  instance,  galvanized  products, 
or  tin  plate,  where  the  base  is  steel,  and  it  is  in  combination  with 
other  products.  What  is  the  intention  of  the  act  with  respect  to 
them,  and  is  there  some  designation  that  could  be  made  that  would 
make  th?  intent  of  the  act  clear  as  to  just  what  is  meant? 

Senator  Kellogg.  I  w^ould  like  to  ask  you,  while  on  that  subject,  a 
(question.  There  are  literally  thousands  of  small  concerns  over  the 
United  States  that  manufacture  every  conceivable  thing  in  which  iron 
enters  into  their  construction.  Do  you  think  it  advisable  for  the 
Government  to  take  over  all  those  concerns  and  fix  the  price 

Mr.  Fairchild.  I  would  not  be  prepared  to  say  that,  and  that  is 
why  T  am  raising  the  query  as  to  whether  iron  ore,  iron,  steel,  and 


PKICE   REGULATION    OF    STEEL.  41 

their  products  might  not  go  iiiuch  further  tlian  the  committee  may 
desire  to  go. 

Senator  Kp:ll()cg.  I  doubt  if  there  is  a  viUage  in  the  country  of 
10,000  people  which  has  not  a  number  of  manufactories  producing 
small  iron  products. 

Mr.  FxViKCHiLD.  That  is  undoubtedly  true. 

Senator  Cu:mmixs.  There  nnist  be  a  distinction  mad?,  however,  be- 
tween giving  the  power  and  its  exercise.  It  would  be  pretty  hard 
to  differentiate  in  giving  the  power.  It  would  be  very  easy  for  the 
Executive  to  exercise  only  a  part  of  the  power  which  has  been  given 
to  him.  I  think  myself  the  effoi-t  to  fix  th?  prices  of  all  things  that 
are  made  from  steel  or  from  iron  and  steel  would  be  absolutely 
impossible. 

Senator  Pomekene.  The  purpose  was  to  simply  confer  this  power 
upon  the  President  and  let  him  exercise  it  whenever  he  saw  fit  to 
(exercise  it — when  the  situation  might  require  it. 

Senator  Kellogg.  Th3re  are  certain  products  of  pig  iron,  bar  iron, 
and  steel  of  the  large  manufacturers  that  make  the  prices  throughout 
the  country,  but  there  are  literally  thousands  of  fabricated  iron 
articles  of  all  kinds,  from  malleable  plants  to  little  stove  plants,  into 
which  iron  goes,  and  as  to  which  it  is  the  principal  raw  product,  and 
it  is  perfectly  useless  for  the  Government  to  hope  to  buy  them  up 

Senator  Cummins.   Blacksmith  shops,  etc. 

Senator  Kellogg.   Yes. 

Senator  Cum.aiins.  It  is  not  to  be  exp?cted  that  we  should  enter 
into  that  field. 

Mr.  Fairchild.  That  is  all  I  have  to  say,  I  think,  Mr.  Chairman. 
I  shall  be  glad  to  go  over  the  bill  and  make  such  suggestions  as  occur 
to  me. 

Senator  Pomerene.  You  have  suggested  a  question  which  has 
troubled  me  a  great  deal,  about  the  so-called  power  of  eminent  do- 
main and  the  police  power,  and  you  have  indicated  certain  things 
which  may  be  done  under  the  police  power  and  tried  to  distinguish 
between  what  might  be  an  exercise  of  the  police  power  and  an  exer- 
cise of  the  power  of  eminent  domain,  and.  as  I  understand  you,  you 
have  said  that  the  fixing  of  prices  was  not  a  power  of  eminent  do- 
main. I  assume  that  you  meant  to  classify  that  as  a  part  of  the 
police  power,  under  this  bill. 

Mr.  Fairchild.  I  am  not  referring  to  the  fixing  of  prices  for  prod- 
ucts that  the  Government  takes  for  its  own  use. 

Senator  Pomerene.  I  understand. 

Mr.  Fairchild.  I  am  speaking  of  a  general  price  fixing. 

Senator  Pomerene.  Has  that  matter  been  the  subject  of  adjudi- 
•cation  in  this  country  at  all  ? 

Mr.  Fairchild.  It  has  not,  so  far  as  I  know,  Senator. 

Senator  Pomerene.  Has  it  been  the  subject  of  adjudication  in  the 
Engilsh  courts,  as  far  as  you  know? 

Mr.  Fairchild.  I  do  not  know.  Of  course  I  have  not  given  it  an 
exhaustive  study,  but  it  would  seem,  on  theory,  that  where  the  Gov- 
ernment does  not  get  for  its  own  use  the  property  to  Avhich  the  act 
applies  it  would  not  be  a  taking  of  the  property;  it  would  be  only 
an  impairment  of  the  value  or  depreciation  of  the  price,  incident  to 
the  exercise  of  the  power  for  the  public  interest. 


42  PRICE  REGULATION   OF   STEEL. 

Senator  Pomerene.  Then  you  would  regard  this  exercise  of  the 
police  power — assuming  that  it  is  a  police  power — as  an  incident 
to  the  commerce  clause  or  the  interstate  commerce  of  the  country? 

Mr.  Fairciiild.  I  do  not  know  that  I  understand  you. 

Senator  Pomerene.  Congress  is  given  the  power  to  regulate  com- 
merce among  the  States  and  the  Indian  tribes  and  \Yith  foreign 
countries.  Now,  is  it  in  that  connection  that  j^ou  find  the  police 
power  ? 

Mr.  Fairchild.  No  more  in  the  line  of  what  you  might  call  the 
war  power — the  power  to  provide  for  the  national  defense. 

Senator  Pomerene.  You  would  defend  this,  then,  on  the  same 
ground  that  we  would  defend  the  right  to  fix  the  price  of  a  loaf  of 
bread  in  the  event  that  the  conditions  were  such  that,  in  the  judg- 
ment of  Congress  and  the  President,  that  became  necessary. 

Mr.  Fairchild.  Yes,  sir;  that  is  correct. 

Senator  Kellogg.  In  the  absence  of  the  war  power  in  times  of 
peace,  you  would  not  claim  that  the  police  power  extended  to  that? 

Mr.  Fairchild.  No,  sir;  perhaps  the  words  "police  power"  are 
inadvisedly  used,  but  it  is  the  power  of  the  Government  in  this  exi- 
gency. 

Senator  Kellogg.  The  power  of  the  Government  to  fix  prices  has 
been  sustained  since  the  earliest  days  of  the  English  Government, 
but  the  power  of  the  Federal  Government  to  fix  prices  is  another 
proposition. 

Senator  Cummins.  That  deserves  a  little  further  inquiry,  I  think. 

Mr.  Fairchild.  Oh,  the  subject  has  just  been  touched. 

Senator  Cummins.  It  is  one  in  which  the  whole  field  has  bothered 
me  a  great  deal.  We  put  aside,  now,  the  commerce  clause  of  the 
Constitution.  Congress  has  a  police  power,  of  course,  growing  out 
of  that  authority,  and  has  directly  the  power  to  regulate  commerce, 
and  that  extends  to  the  fixing  of  prices.  But  this  bill  is  not  bot- 
tomed on  that  clause  in  the  Consitution,  because  it  applies  to  all 
commodities,  whether  carried  in  interstate  commerce  or  not.  We 
must  find  some  other  power,  therefore,  upon  Avhich  to  rest  this  legis- 
lation. I  assume  there  is  no  other  power  except  the  so-called  war 
power.  There  is  no  police  power  incidental  to  the  war  power,  I 
think,  because  the  war  power  is  all  embracing,  is  comprehensive,  and 
then  we  are  brought  to  this  conclusion,  that  we  have  reached  a  point 
where  we  believe  the  national  defense,  the  safety  of  the  country  in 
time  of  war.  requires  that  the  Government  shall  do  one  or  the  other 
of  these  things — either  fix  the  price,  regulate  transportation  and  pro- 
duction, or  take  the  property  itself. 

What  do  you  understand  is  the  application  of  the  fifth  amendment 
to  the  Constitution  to  the  war  power  ? 

Mr.  Fairchild.  You  might  be  interested  in  reading  Judge  Hughes' 
article  on  the  war  power  as  applied  to  the  Constitution,  which  was 
delivered  before  the  American  Bar  Association  a  few  days  ago  and 
printed  in  the  Record. 

There  are  certain  war  powers,  as  I  understand  it,  in  the  light  of 
which  the  Constitution  was  adopted,  and  which  are  not  affected  by 
certain  of  its  provisions — at  any  rate  in  the  light  of  which  they  must 
be  read.  If  it  were  not  so,  you  could  not  conscript  anyone  for  the 
Army,  nor  could  you  shoot  a  rebel,  when  caught,  or  do  a  great  many 


PRICE   REGULATION   OF   STEEL.  43 

other  things,  unless  the  war  power  Avere  inherent  in  government, 
and  not  affected  by  certain  provisions  of  the  Constitution.  So,  it 
is  a  very  large  question  as  to  what  war  powers  are  superseded  or 
affected  by  these  amendments  or  provisions  of  the  Constitution, 
and  what  are  not. 

It  has  been  held  that  in  the  realm  of  actual  military  operations, 
for  instance,  the  property  of  a  loyal  citizen  of  the  (Tovernment  may 
be  taken  ancl  appropriated  and  not  even  jjaid  for. 

Senator  Kellogg.  And  destroyed. 

Mr.  Faipx'iiild.  Yes;  and  destroyed  and  not  paid  for.  That  is 
because  the  amendjnent  to  the  Constitution  is  read  in  the  light  of 
the  war  power  which  existed  at  the  time  it  was  enacted,  and  which 
IS  inherent  in  government  and  necessary  for  its  protection  and  safety, 
and  after  the  Civil  War  there  were  a  number  of  cases  where  the 
property  in  the  South  of  loyal  citizens  of  the  North  was  destroyed, 
find  in  others  taken.  In  other  wars  the  same  thing  occurred  as  when 
Gen.  Jackson  took  cotton  at  New  Orleans. 

Senator  Kellogg.  Then  Senator  Cummins'  statement  is  correct,  that 
the  fifth  amendment  has  nothing  to  do  with  it? 

Mr.  Fairchild.  To  that  extent  it  is  true. 

Senator  Cummins.  You  have  suggested  that  there  is  more  danger 
from  the  constitutional  standpoint  in  attempting  to  exercise  the 
power  of  taking  the  property  at  a  price  that  the  Government  may 
determine  to  pay  for  it  than  in  fixing  the  price  at  which  the  owners 
shall  sell  the  property.  Now,  I  am  unable  to  see  that  because  either 
I  one  is  the  exercise  of  a  war  power,  and  if  the  Government  fixes  a 
price  that  is  inadequate,  and  the  fifth  amendment  to  the  Constitution 
applies,  it  seems  to  me  that  it  is  just  as  fatal  as  if  the  Government 
took  the  property  itself  and  fixed  an  inadequate  price. 

Senator  Kellogg.  I  am  inclined  to  think  you  are  right.  ^Yhat  we 
are  coming  back  to,  in  this  price  fixing  is,  are  these  staple  articles, 
reasonably  necessary  in  the  prosecution  of  the  war.  If  they  are, 
we  have  the  power,  and  if  they  are  not,  we  have  not. 

Senator  Cummins.  I  recall  we  were  in  consideration  of  another  bill 
which  had  more  direct  reference  to  the  war,  and  Gen.  Crowder,  whom 
I  regard  as  a  very  excellent  lawyer,  stated,  as  I  understand  him — 
and  he  read  several  authorities  to  prove  it — that  it  was  within  the 
power  of  the  United  States,  in  making  war  or  defending  itself 
against  war,  whether  in  the  scene  of  military  operations  or  without 
the  scene,  to  take  property  without  making  any  compensation  at  all 
for  it. 

Mr.  Fairchild.  If  he  read  authorities  to  that  effect,  there  are,  I 
think,  plenty  to  the  other  effect. 

Senator  Cummins.  I  know  that. 

Mr.  Fairchild.  That  is,  if  property  is  taken  outside  of  the  actual 
realm  of  military  operations,  not  superinduced  by  an  immediate 
military  necessity,  the  Government  must  pay  for  it. 

Senator  Cummins.  Of  course  the  Government  will  pay  for  it.  We 
need  not  consider  that  phase  of  it. 

The  abstract  question  is  really  academic,  but  the  question  that  im- 
mediately follows  it  is,  I  think,  pretty  well  settled.  The  Government, 
at  the  time,  fixes  the  value  through  some  tribunal  which  it  appoints 
for  that  purpose.    I  think  the  judgment  or  the  conclusion  of  that 


■44  PRICE    REGULATION    OF    STEEL. 

tril»unal  can  be  made  conclusive,  and  that  there  can  be,  or  need  be, 
no  review  of  its  action  at  any  future  time. 

Mr.  Fairchild.  Do  you  mean  it  can  be  made  so  by  law  that  prop- 
erty may  be  actually  confiscated? 

Senator  Cummins.  I  mean  that  there  is  not  any  right  of  trial  in 
an  ordinary  court;  that  the  law  can  constitute  a  tribunal,  for  in- 
stance, the  Federal  Trade  Commission,  and  it  could  say — in  my 
opinion,  and  that  is  a  thing  that  I  really  want  your  judgment  about — 
the  law  can  say  to  the  Federal  Trade  Commission,  "  You  shall  make 
an  inquiry,  giving  the  oAvner  of  the  property,  of  course,  opportunity 
t()  be  heard,  and  you  shall  then  reach  a  conclusion  or  enter  a  judg- 
ment with  respect  to  the  compensation  which  the  Government  shall 
make  for  the  property,"  and  that  the  judgment  of  any  such  tribu- 
nal shall  be  final.  I  think  that  is  a  valid  law,  if  it,  does  give  the 
owner  of  the  property 

Mr.  Fairchild.  His  day  in  court? 

Senator  Cummins.  An  opportunity  to  be  heard,  and  the  judgment 
of  that  tribunal  is  the  law  of  the  land.  If  we  can  not  proceed  upon 
that  theory,  why,  we  are  aljsolutely  helpless  in  this  contingency.  If 
we  have  to  look  forward  to  the  danger  of  having  all  these  things 
opened  up  before  a  court  and  jury  in  future  years,  we  do  not  know 
where  we  are. 

Mr.  Fairchild.  I  think  this  much  is  certain,  that  a  judgment  of 
any  trbunal  that  is  desiirrated  on  a  question  of  fact  is  final. 

Senator  Cummins.  Well,  it  is  a  combination  of  fact  and  law. 

Mr.  Fairchild.  Well,  even  a  combination  of  fact  and  law. 

Senator  Cummins.  Every  judgment  is;  but  the  Federal  Trade 
Commission  lo' ks  into  this  steel  situation.  And  suppose  the  Govern- 
ment is  considering  iron  ore  or  steel  or  coal,  or  whatever  may  be 
necessary  to  make  those  products.  The  commission  says  they  are  worth 
so  much.  "  We  are  reaclv  to  hear  the  oAvner  of  these  things."  They 
do  hear  the  owner,  and  they  say  to  the  Govornm_ent  that  just  com- 
T)ensation  is  so  and  so.  Now,  I  believe  that  the  law  can  make  that 
iudf>Tnent  absolutely  final  and  protect  the  people  of  the  country 
against  any  of  the  dangers  that  have  been  suggested. 

Commissioper  Davies.  Is  not  the  question  of  compensation  a  con- 
stitutional right,  and  strictly  a  judicial  question,  and  would  not  the 
question  come  up  as  to  whether  or  not  the  constitutional  right  of  the 
perpon  to  the  property  that  was  taken  was  violated. 

Senator  Cummins.  No:  the  Supreme  Court  of  the  United  States 
has  held  that  condemnation  proceedings  may  be  had  before  any 
tribunal  which  the  law  may  appoint,  and  in  the  absence  of  any  ap- 
peal given  in  the  statutes  the  judgment  of  the  tribunal  is  final.  You 
have  got  to  give  the  owner  an  opportunity  to  be  heard ;  that  is  all. 

Mr.  Fairchild.  In  other  words,  the  hearing  before  such  tribunal 
is  judicial? 

Spuator  Cummins.  It  is  res  judicata. 

Mr.  Fairchild.  Now,  following  out  yoiu-  line  of  argument,  the 
Supreme  Court  held,  as  I  recall  it.  in  the  Eussell  case,  in  Thirteenth 
Wallace,  where  a  claim  was  presented  before  the  Court  of  Claims, 
that  thr^re  was  no  jurisdiction  in  the  Court  of  Claims,  because  the 
law  had  designated  the  Secretary  of  the  Treasury  as  the  person  to 
make  the  determination  of  damages,  and  tiuU  the  remedy  was  there. 


PRICE   REGULATION    OF    STEEL.  45 

Senator  Cummins.  Well,  the  Supreme  Court  held  in  the  Mononga- 
hela  Navigation  Co.  case  that  if  the  law  provided  a  tribunal — not 
necessarily  a  judicial  tribunal,  an  ordinary  judicial  tribunal,  but  a 
tribunal  before  which  the  owner  of  the  jirc  perty  could  be  heard — the 
demands  of  the  Constitution  will  be  fully  complied  with. 

Dr.  Walker.  That  meets  the  fourteenth  amendment,  the  process 
of  law,  the  law  of  the  land,  and  it  is  true  of  taxation,  condemnation, 
and  thousands  of  other  things.    It  is  summar}^  jurisdicti(-n. 

Senator  Cummins.  I  wish  you  would  lock  into  that  matter.  That 
is  a  question  that  comes  up  here  every  time  we  attempt  to  pass  any 
of  these  war  measures. 

Mr.  Fairchild.  I  am  very  willing  to  do  that,  Senator. 

The  Chairman.  You  w^ere  speaking  of  the  multiform  character 
of  the  iron  and  steel  business.  Why  could  not  every  requirement  be 
met  by  simply  taking  over  the  ore,  and  then  by  a  system  of  licensing 
regulate  the  manufacturers  and  the  dealers  in  the  disposal  of  the 
products  of  that  ore? 

Mr.  Fairchild.  The  product  of  the  ore;  that  is  all  you  are  doing 
under  the  act,  is  it  not?  Iron  is  the  product  of  the  ore,  as  are  all  of 
the  products  that  follow  iron. 

The  Chairman.  Would  it  not  simplify  it  very  much  to  just  take 
hold  of  the  ore,  and  then  to  control  the  price  of  the  products  of  that 
ore  through  agencies  licensed  for  the  production  and  sale  of  such 
products  ? 

Mr.  Fairchild.  Well,  the  Executive  may  reach  the  conclusion  that 
that  is  as  far  as  he  needs  to  go.  The  question  is  whether  his  power 
should  not  be  broader,  is  it  not,  if  the  necessity  arises  ? 

The  Chairman.  No;  my  suggestion  is,  would  it  not  meet  the  entire 
situation  and  simplify  it  very  much  to  merely  authorize  the  Presi- 
dent to  take  over  the  ore  in  the  mines,  or  Avherever  it  was,  and  then 
to  regulate,  through  a  system  of  licensing,  the  sale  of  the  product  of 
that  ore  ? 

Senator  Kellogg.  The  products  are  not  made  of  the  ore. 

The  Chairman.  That  is  true,  but  if  the  Government  once  obtains 
the  title  to  the  ore  itself,  it  could  then  fix  the  conditions  upon  which 
the  producers  could  put  that  ore  into  shape  and  put  it  upon  the 
market. 

Senator  Kellogg.  You  will  find  that  much  of  this  ore  belongs  to 
the  States.    Take  Minnesota,  for  instance. 

Mr.  Wooster.  The  ore  is  mined  by  one  company  and  the  plates 
are  produced  by  another  company  four  places  removed.  It  has  passed 
through  four  hands  before  it  is  turned  into  plates. 

Senator  Kellogg.  That  is  true.  The  State  ore  is  mined  by  men 
who  have  leases.    Those  leases  are  subject  to  cancellation  at  any  time. 

The  Chairman.  Is  not  the  main  product  of  the  mines  in  Minnesota 
the  actual  property  of  private  corporations? 

Senator  Kellogg.  Oh,  the  larger  percentage,  of  course,  is — vastly 
the  larger  percentage. 

Mr.  Wooster.  That  Avould  involve  the  taking  over  of  the  ore  itself 
and  then  have  all  the  very  difficult  administrative  labor  of  selling  this 
ore,  which  is  of  a  great  variety  of  grades  and  qualities,  and  getting 
it  to  each  producer  and  furnace  man  in  the  proper  quantities  and 
mixtures,  etc.  It  is  much  easier  to  fix  the  price  than  to  do  the  busi- 
ness for  them.     That  is  a  practical  question. 


46  PRICE   REGULATION   OF   STEEL. 

Senator  Kellogg.  It  is  a  very  complicated  business.  It  varies  as 
to  grades  of  ore  and  different  qualities,  etc.  I  have  not  looked  into 
the  cost,  but  I  assume  that  the  big  price  of  iron  and  steel  products 
on  the  market  to-da}^  is  not  on  account  of  the  big  price  of  ore. 

Commissioner  Davies.  It  is  not  the  high  price  of  ore.  You  are 
right. 

Senator  Kellogg.  The  ore  has  not  varied  so  tremendously. 

The  Chairman.  But  j^ou  failed  to  catch  my  point,  and  that  is,  that 
it  is  comparativelv  a  simple  process  to  get  possession  of  the  ore. 
Now  3'ou  have  got  it 

Senator  Kellogg.  ^Vhat  will  you  do  with  it  ? 

The  Chairman.  You  can  part  with  it  upon  condition  that  the 
party  licensed  can  make  a  profit  out  of  that  ore  that  you  sell  them, 
and  shall  not  charge  exceeding  a  certain  price,  and  you  can  with- 
hold from  persons  who  disobey  the  rules  any  further  contributions 
of  ore. 

Mr.  Fairchild.  But  suppose  you  sell  ore  to  a  concern  that  makes 
only  pig  iron  and  enter  into  an  arrangement  with  it  that  you  will 
not  furnish  it  ore  unless  it  sells  its  pig  iron  at  a  certain  price.  Where 
do  you  get  your  control  over  the  subsequent  operators?  The  man 
who  sells  pig  iron  sells  to  a  man  who  makes  billets ;  the  billet  man 
sells  to  some  one  who  makes  the  finished  product.  You  have  a  chain 
of  agreements,  and  that  would  have  to  be  worked  out,  not  by  reason 
of  the  holding  of  the  ore,  but  all  down  the  line.  The  administrative 
difficulties  would  be  tremendous. 

Commissioner  Davies.  Mr.  Chairman,  will  you  permit  me  to  out- 
line a  thought  that  I  have  in  connection  with  the  matter,  which  Mr. 
Fairchild  has  suggested,  as  to  the  form  and  extent  of  the  power 
given  to  the  Executive  under  this  act? 

As  I  understand  it  the  preponderance  of  authority  is  to  the  effect 
that  the  war  power  supersedes  any  protection  that  the  fifth  amend- 
ment gives  to  private  property,  where  the  destruction  of  the  property 
is  due  to  military  necessity  in  the  actual  field  of  military  operations, 
or  where  the  property  is  the  property  of  a  citizen  adjacent  to  the 
military  operations,  and  situs  gives  it  a  militar}^  character.  So  that 
property  can  be  taken  by  the  Government  and  destroyed  without 
compensation.  I  understand  also  that  it  is  the  weight  of  authority 
that  where  the  property  of  a  citizen  is  not  adjacent  to  the  military 
operations,  that  if  it  is  then  taken,  the  fifth  amendment  does  apply 
and  just  and  fair  compensation  must  be  paid. 

Senator  Cummins.  Can  you  stop  at  that  point  without  any  em- 
barrassment?   I  desire  to  clear  a  point  that  is  in  my  mind. 

Commissioner  Davies.  Certainly. 

Senator  Cummins.  The  Government  can  onl3^  take  property  for 
public  use? 

Commissioner  Davies.  Yes,  sir. 

Senator  Cummins,  What  makes  it  a  public  use,  to  take  it  for  the 
benefit  of  the  people  generally? 

Commissioner  Davies.  Of  course  that  is  again  the  war  power. 

Senator  Cummins.  That  is  arguing  in  a  circle,  is  it  not? 

Commissioner  Davies.  Well,  perhaps  it  is. 

Senator  Cummins.  It  bothers  me  a  lot.  I  simply  wanted  to  know, 
and  I  hope  I  have  not  disturbed  your  chain  of  thought. 


PRICE   REGULATION   OF   STEEL.  47 

Commissioner  Da  vies.  No;  you  have  not  disturbed  mj'  chain  of 
thought,  but  you  have  the  chain  of  my  conchisions. 

I  have  followed  it  out  in  this  way.  that  the  Government,  therefore, 
has  the  poAver  to  take  property  in  this  ex'gency  by  reason  of  its  war 
power.  It  might  have  power  over  property  arising  out  of  its  war  power 
not  amounting  to  taking  the  property,  which  would  be  analogous  to 
the  police  power  in  connection  with  power  over  interstate  com- 
merce, but  which  would  impair  the  value  of  property  just  as  prop- 
erty value  might  be  impaired  by  police  regulations  in  interstate 
commerce,  but  for  which  impairment  there  could  be  no  claim  for 
compensation  as  there  would  be  if  the  property  were  actually  taken. 
That  is,  that  there  might  be  two  exercises  of  the  war  power;  one 
an  actual  taking  of  property,  the  other  only  a-  regulation  of  its  use. 

Now,  if  that  is  so,  then  the  Lever  Act  provides  practically  for  three 
methods — one,  the  fixing  of  a  flat  price  for  the  commodity  and  the 
tixing  of  a  maximum  price;  secondly,  the  commandeering  of  the 
plant ;  and  third,  the  purchase  of  all  the  commodity  and  its  resale. 

Now,  fixing  the  maximum  price  for  the  property  might  be  held  not 
to  be  a  taking  of  property,  but  the  regulation  necessary  in  the  war  to 
promote  the  general  welfare  and  promote  war  efficiency — analogous 
to  the  police  power  exercised  by  the  States,  which  is  not  taking 
the  property  but  which  impairs  the  value  of  the  property. 

The  pooling  or  purchase  provision  of  the  Lever  Act  was  designed, 
as  I  understand  it,  to  permit  of  an  opportunity  for  the  Executive  to 
take  and  fix  a  price,  not  at  a  flat  maximum  price,  which  would  oper- 
ate to  give  a  very  high  profit  to  a  very  low-cost  producer  and  a  small 
profit  to  the  high-cost  producer,  but  to  permit  the  Executive  another 
alternative,  to  wit.  to  purchase  all  the  property  at  varying  prices, 
to  pool  it,  and  resell  it  at  an  average  price  which  would  be  less  than 
a  maximum  price. 

Now,  the  Lever  law  expressly  provides  that  the  Government  shall 
take  by  purchase.  There  is  then  no  question  of  the  "  taking "  of 
property  and  perhaps  the  right  of  the  producer  to  have  his  claim 
for  just  compensation  adjudicated.  If  there  were  a  provision  made 
for  the  regulation  and  control  of  sale  and  shipment,  which  would  in 
effect  do  the  same  thing,  to  wit,  pool  but  not  purchase,  it  might  avoid 
the  question  of  compensation  for  the  reason  that  there  would  be  no 
taking  but  only  regulation,  analogous  to  the  police  power  under  nor- 
mal conditions,  for  which  there  would  be  no  remedy  for  the  impair- 
ment of  the  value  which  such  regulation  to  promote  the  general 
welfare  would  impose.  This  may  be  largely  an  academic  suggestion. 
I  do  not  know  whether  there  is  value  in  it  or  not. 

Senator  Cum^iins.  There  may  be,  but  certain  parts  of  your  argu- 
ment I  do  not  understand  clearly. 

In  the  first  place,  the  purchase  and  control  under  the  Lever  Act  is 
not  a  voluntar}'  arrangement.  The  act  requires  the  owner  to  sell  the 
output  at  a  price  to  be  determined  by  the  Federal  Trade  Commission. 
It  is  just  as  involuntary  a  proceeding  as  the  ordinary  condemnation 
proceeding  usually  is,  and  I  am  in  doubt  about  the  matter.  I  am 
sure  we  should  have  to  advance  somewhat  in  our  constitutional  views 
in  order  to  sustain  it.  I  believe,  however,  that  every  constitutional 
view  is  advancing  with  the  necessities  of  the  people. 

Now,  as  to  your  other  point,  that  the  fixing  of  the  price  at  which 
the  product  shall  be  sold  by  the  producer,  or  by  the  dealer,  is  not  a 


48  PEICE   REGULATIOISr    OF    STEEL. 

taking  required  by  the  Constitution.  It  is.  in  my  judginent,  merely 
technical.  Xo  matter  Avhat  the  courts  haAe  said  as  to  its  being  a 
taking  of  property,  the  fact  remains  that  if  the  price  fixed  is  not 
adequate  it  is  a  confiscation  and  is  protected  by  the  fifth  amendment 
to  the  Constitution. 

The  Supreme  Court  has  held  with  regard  to  the  Interstate  Com- 
merce Commission  that  it  will  not  review  the  facts;  that  it  must 
appear  either  that  the  commission  exceeded  its  authority  or  that  it 
acted  arbitrarily  and  without  any  respect  to  the  evidence  before  it., 
but  all  the  time  bearing  in  mind  that  in  fixing  the  compensation  that 
railway  companies  are  entitled  to  charge  for  the  services  rendered ; 
that  the  railway  company  is  entitled  to  all  the  protection  of  the  fifth 
amendment  to  the  Constitution.  That  has  never  been  doubted,  no 
matter  what  may  be  the  opportunity  for  review,  but  it  provided  in 
that  respect  that  when  the  Interstate  Commerce  Commission  comes 
to  fix  a  rate  for  a  railroad  company  it  is  bound  to  regard  the  fifth 
amendment  to  the  Constitution  and  so  fix  the  rate  that  the  property 
of  the  company  will  not  be  taken  Avithout  due  compensation.  It  is  a 
very  difficult  field. 

Senator  Pomerexe.  We  have  drawn  this  whole  bill  as  an  exercise 
of  war  power.  I  want  to  make  this  suggestion  further  with  regard 
to  this  bill.    There  is  one  provision  in  here  with  respect  to  contracts. 

Commissioner  Da  vies.  Contracts;  that  is  what  I  have  in  mind. 

Senator  Pomerexe.  I  am  convinced  from  my  study,  not  only  of 
this  proposition  but  of  the  coal  and  coke  proposition,  that  you  have 
got  to  give  plenary  power  to  the  President  if  he  is  going  to  be  suc- 
cessful in  the  administration  of  this  law  and  bring  relief  to  the 
public,  and  I  should  like  to  hear  what  suggestions  the  Trade  Com- 
mission has  to  make  with  respect  to  contracts  which  may  now  be  in 
operation. 

Commissioner  Davies.  Well,  Senator,  we  are  firmly  of  the  belief 
that  the  full  measure  of  relief  that  you  expect  to  bring  to  the  public 
by  this  proposed  legislation  will  not  ensue,  provided  bona  fide  con- 
tracts that  have  been  entered  into  in  good  faith  prior  to  the  fixing  of 
price  remain.  In  the  matter  of  coal,  we  find  that  some  75  to  80  per 
cent  of  the  coal  production  of  the  country  has  been  contracted  for, 
apparently  in  good  faith,  prior  to  the  fixing  of  the  maximum 
price 

Senator  Po:\rEREXE.  That  is,  some  of  it  is  in  good  faith. 

Commissioner  Davies.  Some  of  it  is  in  good  faith  and  some  is  not ; 
and  we  are  now  investigating  it  upon  the  direction  of  the  fuel  admin- 
istrator. That  left  the  coal  administrator  in  a  situation  where  his 
price  control  aifected  approximately  only  15  to  25  per  cent  of  the 
coal — that  is,  the  coal  which  the  domestic  consumer  and  small  con- 
sumer was  using — with  the  result  that  the  relief  that  was  antici- 
pated did  not  come,  and  he  is  now  trying  to  bring  about  some  change 
in  that  situation,  as  I  understand  it,  by  getting  some  of  the  contract 
coal  released  so  as  to  bring  relief  to  the  situation. 

Senator  Pomerexe.  Now,  I  want  to  interrupt  you  at  that  point.  I 
have  positive  information  that  a  lot  of  these  coal  operators  are  using 
certain  contracts,  and  they  are  flexible  in  character  in  such  way  as 
to  persuade  if  not  to  enforce  contracting  parties  to  take  more  coal 
than  thej'  really  need  for  the  requirements  of  their  business.    Other 


PKICE   REGULATION    OF   STEEL.  49 

contracts  are  being  antedated,  and  the  important  thing  is  to  get  some 
lawyer  busy  and  prosecute  those  fellows,  and  then  you  will  get  this 
relief,  and  that  is  the  only  way  it  will  come. 

The  Chairman.  Who  is  to  do  the  prosecuting,  the  Trade  Commis- 
sion or  the  Attorney  General? 

Commissioner  Da  vies.  We  will  get  the  facts,  Senator. 

Senator  Cummins.  Do  you  believe  we  can  cancel  the  outstanding 
contracts  without  making  compensation? 

Commissioner  Davies.  It  is  the  same  question,  regardless  of 
whether  you  make  compensation  or  not,  Senator.  To  bring  the  relief 
that  you  expect  to  bring  to  the  public  you  must  suspend  these  con- 
tracts ;  and  if  you  desire  to  bring  the'  relief  to  the  public,  and  if 
you  have  to  pay  them  for  it,  it  is  not  more  than  compensation  that 
you  would  have  to  pay  for  property  that  you  take  for  the  Govern- 
ment. 

Senator  Cummins.  I  do  not  quite  understand  the  word  "  suspend." 
I  used  the  word  "  cancel."  You  do  not  mean  that  at  some  future 
time  the  contracts  are  to  be  revived  and  be  performed,  do  you? 

Commissioner  Davies.  I  have  used  the  word  "  abrogated."  It  has 
been  criticized  as  too  harsh  a  word  to  define  an  idea,  and  it  has  been 
suggested  by  some  members  of  the  War  Industries  Board  that  these 
contracts  might  possibly  be  suspended  in  operation,  to  go  back  after 
this  exigency  has  disappeared. 

Senator  Cummins.  But  we  will  have  to  go  back  at  the  will  of  the 
persons  who  make  them.  You  could  not  suspend  them  and  then 
when  conditions  have  changed  require  either  party  to  perform  them, 
and  is  it  not  true,  Mr.  Davies,  that  in  order  to  carry  on  the  business 
of  this  country  properly,  and  in  view  of  the  fact  that  the  buyers  of 
a  large  part  of  this  fuel  are  themselves  in  competition  with  each 
other,  that  they  must  be  able  to  buy  on  even  terms  or  they  can  not 
compete  with  each  other,  or  would  not  compete  with  each  other? 

Commissioner  Davies.  That  is  absolutely  correct,  and  if  you  have 
contract  prices  for  pig  iron  to-day  at  $54  a  ton  and  the  Government 
should  fix  a  price  on  pig  iron  at  $25  the  man  who  has  been  provi- 
dent and  taken  care  of  his  wants  for  the  future  by  entering  into  a 
contract  for  six  months  will  be  penalized  because  the  cost  of  his 
basic  materials  are  so  much  higher  than  those  of  the  man  who,  per- 
haps, has  not  been  provident. 

Senator  Cummins.  It  seems  to  me  that  no  matter  what  the  con- 
sequences may  be,  if  we  are  going  to  try  to  restore  business  to  any- 
thing like  its  normal  condition  and  give  everybody  an  even  chance, 
we  must  cancel  those  contracts. 

Commissioner  Davies.  I  think  that  is  the  idea. 

Senator  Kellogg.  And  yet  every  railroad  company  bin^s  its  nuts, 
bolts,  and  plates,  and  all  its  iron  practically  on  yearly  contracts. 
Nearly  every  manufacturer  in  the  country,  little  and  big,  buys  and 
sells  his  product  purely  on  contracts  for  the  year.  There  is  not  a 
great  deal  of  $55-a-ton  iron  in  the  country. 

Commissioner  Davies.  It  is  quite  remarkable.  Senator,  the  extent 
at  which  it  has  been  contracted  for  at  high  prices  in  the  last  two 
months. 

Senator  Kellogg.  $35  ? 

14774— IT— PT  1 4 


'50  PRICE    REGULATION    OF    STEEL. 

Coiiunissioner  Da  vies.  $35 ;  but  we  find  frequently  in  this  cost  that 
the  cost  of  metallic  mixture  runs  way  up — $54  and  $58  in  plates,  for 
instance. 

Senator  Kellogg.  $54  and  $58  iron  is  job-lot  iron. 

Commissioner  Davies.  It  is  prompt-delivery  iron. 

Senator  Kellogg.  But  very  few  men  have  entered  into  a  contract 
for  iron  in  the  next  year  at  $55  a  ton. 

The  Chairman.  Do  you  refer  to  pig  iron? 

Senator  Kellogg.  Yes. 

Commissioner  Davies.  If  you  will  permit  me  to  say,  there  are  a 
number  who  have  come  to  us  and  said  that  they  have  contracts  for 
pig  iron  at  $55. 

Senator  Kellogg.  A  few  of  them.  They  are  contracted  at  other 
prices. 

Senator  Cummins.  Is  it  not  true  that  inasmuch  as  the  cancella- 
tion of  these  contracts  would  result  in  not  only  an  equalization  of 
prices,  but  in  a  reduction  of  prices  to  the  buyer,  that  the  only  harm, 
or  the  only  person  who  would  really  be  entitled  to  our  consideration, 
would  be  the  seller?  It  is  not  going  to  disturb  business  any  to  can- 
cel the  contracts,  because  they  will  be  getting  their  stuff  at  a  lower 
price  generally,  but  the  person  who  has  made  the  contract  to  sell  at 
this  high  price  will  have  some  reason  to  complain. 

Senator  Kellogg.  They  have  all  got  to  do  business  under  a  con- 
tract system.     They  can  not  buy  from  hand  to  mouth. 

Commissioner  Davies.  That  is  true. 

Senator  Kellogg.  The  railroads  will  not  buy  it. 

Commissioner  Davies.  They  won't  if  they  can  help  it,  but  here 
are  two  very  large  plate  men — and  the  plates  of  the  country  are 
produced,  or  probably  90  per  cent  are  produced  by  eight  companies 
in  the  United  States — and  as  to  two  of  them  we  took  their  May  costs 
and  found  that  their  May  costs  on  plates  ranged  from  $37  to  $49 — 
my  memory  may  not  be  strictly  exact,  but  it  is  in  that  vicinity — and 
they  stated  to  us  that  if  they  had  to  buy  at  the  present  contract  rates 
their  cost  for  plates  would  run  up  to  $54  to  $62.  One  of  the  large 
plate  concerns  advised  that  it  had  already  contracted  for  pig  iron 
at  over  $50  up  to  next  June. 

With  reference  to  the  railroad  contracts,  what  you  have  said  is 
very  true,  and  it  is  particularly  true  of  coal.  I  have  heard  from 
several  large  operators  that  they  could  make  a  profit,  and  a  large 
profit  on  the  price  fixed  for  coal  in  the  Illinois  field,  for  instance, 
if  they  could  cancel  old  contracts  for  a  large  part  of  that  production 
with  railroad  companies,  which  are  at  prices  at  which  there  is 
scarcely  any  profit  at  all.  The  result  is  that  the  railroad  companies 
are  getting  coal  at  A^ery  low  prices  and  other  consumers  of  coal  are 
paying  for  it  at  high  prices. 

Senator  Kellogg.  What  I  mean  is  the  railroad  company  can  not 
rely  on  handling;  it  is  impossible  for  them  to  risk  it;  they  will 
not  buy  their  material,  their  coal,  or  anything,  but  generally  have 
got  to  contract? 

Commissioner  Davies.  Yes,  sir. 

Senator  Cummins.  To  answer  Mr.  Davies,  nearly  all  the  low  coal 
contracts  expired  on  the  1st  of  April  or  the  1st  of  July  of  this  present 
year,  and  the  contracts  that  have  been  made  since  that  time  are  not 
unreasonable  at  all? 


PRICE   REGULATION    OF    STEEL.  51 

Commissioner  Davies.  I  think  that  is  true. 

The  Chairman.  Senator  Pomerene,  is  there  anything  in  this  bill 
that  pertains  to  public  utilities  that  declares  the  use  of  iron  and  steel 
is  a  public  need  ? 

Senator  Pomerene.  Xo  ;  it  is  based  upon  the  war  power  entirely. 

The  Chairman.  Is  not  this  suggestion  worthy  of  consideration? 
T  amagine  there  is  no  question  as  to  the  power  of  tlie  National  Gov- 
ernment to  declare  almost  anything  that  is  generally  necessary  to 
be  of  public  use;  it  has  done  that  with  reference  to  railroads,  tele- 
graph lines,  and  telephone  lines;  the  State  government  has  done 
that  with  reference  to  water  and  gas  companies  and  electric  light 
companies.  I  do  not  know  that  the  Xational  Government  has  ever 
sought  to  regulate  the  use  of  water  or  electricity  or  the  use  of  gas  in 
interstate  commerce,  but  I  amagine  there  is  no  doubt  about  its  right 
to  do  it.  Now,  then,  why  could  we  not  declare  that  the  use  of  ore 
and  iron  and  steel  was  a  public  use  and  regulate  it  in  interstate 
commerce  ? 

Senator  Cum:mins.  Your  statement  of  the  law  is  not  quite  correct. 
As  I  understand  it,  the  Supreme  Court  of  the  United  States,  in  the 
case  of  Munn  v.  Illinois,  declared  that  what  is  a  public  use  is  a 
judicial  question,  not  a  legislative  one,  and  that  is  to  be  determined 
by  the  character  of  the  propert}^  and  the  use  to  which  it  is  j)ut. 

The  Chairman.  Giving  great  weight,  though,  to  a  legislative 
decree. 

Senator  Cummins.  In  the  absence  of  the  war  power,  which  looms 
up  before  us,  we  do  not  know  just  where  its  body  and  soul  may  be — 
in  the  absence  of  the  war  power  I  do  not  think  the  legislature  can 
make  what  the  civilization  of  the  time  declares  to  be  a  private  use 
a  public  use.  The  court  has  got  to  say  whether  that  use  is  a  public 
use. 

The  Chairman.  But  the  legislative  declaration  would  have  great 
weight,  and  it  seems  to  me  that  in  the  present  condition  of  things 
there  is  no  use  in  which  the  public  are  more  greatly  concerned  than 
in  the  use  of  iron  and  steel.  It  seems  to  me  that  any  argument  that 
would  apply  to  electricity  or  gas  or  water  would  apply  to  iron  or 
steel,  which  enter  as  component  parts  into  almost  everything  that  we 
use. 

Senator  Kellogg.  It  applies  to  cotton,  does  it  not ;  potatoes ;  it  ap- 
plies to  anything  and  everything  of  use  ? 

The  Chair:man.  The  legislative  declaration  that  the  use  of  this 
thing  is  so  essential  and  necessary  to  the  public,  and  the  conditions 
are  such  as  to  require  the  control  of  that  use.  It  seems  to  me  there  is 
hardly  anything  to  which  the  doctrhie  can  not  be  applied,  if  the  pub- 
lic judgment  has  been  expressed,  through  a  legislative  decree,  that 
that  particular  thing  is  essential. 

Mr.  Fairchild.  I  have  not  read  the  Munn  v.  Illinois  case  in  a  good 
many  years,  but  my  recollection  is  that  it  applied  in  that  case  to 
wheat. 

Senator  Cummins.  Public  warehouses.  In  that  particular  case 
grain. 

Senator  Kellogg.  An  elevator  used  in  the  transportation  of  grain 
in  interstate  commerce. 


52  PRICE    EEGULATION    OF    STEEL. 

Senator  Pomerene.  Here  is  the  Munn  case  [reading]  : 

Where  the  owner  of  property  devotes  it  to  'a  use  in  which  the  public  lias  an 
interest,  in  effect  he  ^'ants  to  the  pulilic  an  interest  in  such  use  and  must,  to 
the  extent  of  that  interest,  submit  to  be  controlled  by  the  pulilic  for  the  common 
good  as  long  as  he  maintains  its  use.  He  withdraws  his  grant  by  discontinuing 
the  use. 

That  is  in  the  syUabus.  If  3^011  apply  that  doctrine  to  your  iron 
and  steel  you  M-oiild  not  have  any  trouble,  would  you. 

The  Chairman.  They  might  stop  producing  iron,  but  they  would 
not  do  it.  Just  as  a  man  could  stop  producing  electricity,  but  he 
would  not  do  it. 

Senator  Cummins.  If  you  put  it  on  that  ground  there  is  no  busi- 
ness that  does  not  become  a  public  business. 

The  Chairman.  The  only  test  is  the  legislative  declaration  as  to 
the  necessity  of  this  thing.  The  public  impressment  upon  the  thing 
itself  of  a  public  use  by  a  legislative  decree.  I  imagine  that  might  be 
done  in  such  a  way  as  to  come  under  judicial  condemnation 

Senator  Cummins.  My  point  is  it  is  altogether  a  judicial  question, 
unless  it  is  the  war  power. 

The  Chairman.  Even  apart  from  the  legislative  declaration  I  do 
not  know  how  the  court  covdd  declare  in  the  present  condition  of 
society  that  the  use  of  iron  and  steel  was  anything  but  a  public  use; 
was  any  less  a  public  use  than  the  use  of  electricity  and  gas. 

Senator  Cummins.  I  entirely  agree  with  you  about  that. 

Commissioner  Da  vies.  It  ma}'  interest  you.  Senator,  if  you  haA^e 
not  noted  it,  to  know  that  the  constitution  of  Oklahoma  expressly 
provides  that  it  sliall  be  a  legislative  function  for  the  legislature  to 
decree  when  an  article  of  commerce  becomes  impressed  with  public 
use  and  subject  to  regulation. 

Senator  Cummins.  Of  course,  if  the  people  themselves  want  to 
make  it  a  legislative  question  they  can,  but  I  do  not  think  any  legis- 
lature can. 

Commissioner  Davies.  Of  course,  then,  if  the  legislature  should 
decree  and  bring  it  up  to  the  Supreme  Court  whether  it  was  a  public 
use 

Senator  Cummins.  Suppose  we  attempted  to  fix  the  price  at  which 
Woodward  &  Lothrop  attempted  to  sell  every  article  in  their  store  ? 

The  Chairman.  In  interstate  commerce? 

Senator  Cummins.  Xo;  I  mean  as  the  controlling  power  of  the 
District  of  Coliumbia;  that  no  matter  how  emphatically  you  might 
decree  that  to  be  a  public  business,  our  declaration  Avould  not  con- 
clude the  matter,  nor  Avould  not  have  any  weight  in  the  matter. 

The  Chairman.  You  can  reduce  almost  any  contention  to  an  ab- 
surdity. 

Senator  Cummins.  I  am  not  sure  whether  we  have  not  come  to  the 
point  where  it  will  be  held  to  be  a  public  use. 

Commissioner  Davies.  Probably  the  best  informed  man  on  Govern- 
ment service  I  know  of,  on  steel,  is  Dr.  Walker.  He  is  here.  He  is 
our  chief  economist.  I  do  not  know  whether  he  has  anything  to  offer, 
but  I  am  sure  if  he  has  it  will  be  well  Avorth  your  time. 

The  Chairman.  Dr.  Walker,  have  you  any  suggestions  to  make  in 
addition  to  those  already  made? 

Dr.  Walker.  There  was  one  point  made  by  Senator  Kellogg  in  re- 
gard to  these  bona  fide  contracts,  which  occurs  to  me  at  the  moment. 


PRICE    REGULATION    OF    STEEL.  53 

Commissioner  Davies  spoke  first  of  the  wide  disparity  between  a 
$25  price,  assuming  the  GoA'ernment  fixed  that  price,  and,  say,  the 
current  marlcet  price;  and  Senator  Kellogg,  as  I  understood  him,  took 
the  position  that  these  current  market  prices  were  not  the  ones  that 
would  be  enforced;  that  they  do  not  apply  to  large  tonnage;  that  the 
actual  contracts  were  at  considerably  lower  figures,  say,  $35  a  ton. 

Now,  assuming  the  Government  would  fix  the  price  at  $'25  even, 
those  other  $35  contracts  would  present  a  difference  in  cost  of  pro- 
duction between  those  that  bought  at  the  Government  price  and  those 
that  bought  on  the  existing  bona  fide  contracts,  which  would,  in  my 
judgment,  upset  any  reasonable  price-fixing  scheme  that  tlie  Gov- 
ernment might  decide  on  establishing  for  subsequent  steel  production, 
so  that  it  is  merely  an  argument  that  goes  to  the  question  of  degree 
and  does  not  affect  the  validity  of  the  position  taken  by  Mr.  Davies, 
that  these  bona  fide  contracts,  if  allowed  to  continue,  would  com- 
])letely  upset  a  successful  scheme  of  price  regulation  at  any  reasonable 
figure. 

I  think  the  figure  he  took — $25 — was  certainly  a  liberal  figure  to 
go  on. 

Senator  Cummins.  One  of  the  thoughts  in  my  mind,  however,  is 
this :  How  would  the  man  who  buys  the  pig  iron  at  $35  a  ton,  or  $40, 
whatever  he  may  have  agreed  to  pay,  compete  in  his  product  with  the 
man  who  gets  it  at  $25  ? 

Mr.  Walker.  That  is  my  point.  It  would  completely  upset  him; 
he  could  not  compete  with  that  $10  difference,  let  alone  a  $25  differ- 
ence, and  the  Government  regulating  such  product  at  respective  levels 
that  woidd  naturally  harmonize  with  a  $25  figure. 

The  Chairman.  Of  course,  if  the  Government  had  the  power  to 
decree  this  to  be  a  public  use,  and  the  courts  should  sustriin  the  exer- 
cise of  that  power,  all  contracts  would  be  abrogated.  I  imagine  that 
a  water  company  is  a  purely  private  organization  supplying  its  cus- 
tomers with  water  if  it  has  not  as  yet  been  decreed  to  be  a  public  use 
and  subject  to  public  regulation,  but  just  as  soon  as  that  declaration 
is  made  and  regulation  is  made,  at  that  moment  all  contracts  end 
and  all  have  a  right  to  resort  to  the  public  utility  for  the  commodity 
upon  equal  terms.  So  my  mind  is  directed  to  this  as  the  possible 
solution  of  the  whole  question,  whether  we  could  not  simplify  it 
by  confining  the  regulation  purely  to  iron  ore,  pig  iron,  and  steel 
billets  or  steel  ]:)lates,  upon  the  assumption  that  the  basic  price  of 
these  things  being  fixed,  and  being  reasonably  fixed,  that  all  the 
products  in  which  they  enter  Avill  be  sold  at  a  reasonable  ])rice  i 

Dr.  Walker.  ^Slay  I  make  a  comment  on  that  at  this  point  'i 

The  Chairman.  Yes. 

Dr.  Walker.  In  the  present  state  of  the  steel  market,  as  a  matter 
of  practical  study,  I  should  not  anticipate  that  would  be  the  conse- 
quence. We  find  it  illustrated  in  the  steel  market  at  the  present 
time.  The  prices  of  ore  are  comparatively  high — higher  than  ever 
before.  The  ])ricos  of  coke  are  very  high — unheard-of  prices.  They 
have  produced  a  high  cost  of  pig  iron;  but,  even  taking  those  prices 
of  ore  and  coke,  translating  them  into  the  cost  of  pig  iron,  as  it  is 
done  for  those  who  have  to  purchase  it,  and  getting  a  very  high  pig- 
iron  cost  on  that  account,  we  do  not  find  the  price  of  pig  iron  cor- 
responds even  to  that  high  cost,  which  is  away  above  this  high  cost  of 
pig  iron. 


54  PRICE   EEGULATIOiSr    OF   STEEL. 

In  other  words  the  same  factor  that  has  made  the  coke  price  out 
of  all  proportion  to  the  cost  of  coke  makes  the  pig-iron  price  high 
out  of  all  proportion  to  the  cost  of  pig  iron,  made  even  b}^  the  people 
who  are  paying  the  highest  prices  for  raw  material.  And  so  in  suc- 
cessive stages  we  find  with  certain  costs  of  steel,  that  the  price  of 
shapes  is  one  thing  and  the  price  of  plates  ver}-  different,  although 
normally  the  cost  of  shapes  and  plates  is  approximately  the  same, 
and  normally  their  prices  have  been  about  the  same,  if  fact,  one 
familiar  with  the  past  prices  of  the  articles  knows  that  ordinarily 
they  were  quoted  at  the  same  level,  especially  if  there  was  any  gen- 
eral agreement  about  what  the  prices  ought  to  be  among  the  pro- 
ducers. 

Xow.  take  the  price  of  shapes  to-day.  I  do  not  remember  the 
exact  figures,  but  it  is  about  one-half  the  price  of  plates.  Why? 
Not  on  account  of  different  conditoins  in  cost  of  crude  steel,  but 
on  account  of  different  demand  conditions  for  these  different  articles. 
The  same  thing  that  has  put  the  price  of  pig  iron  away  above  the 
cost  of  even  high-cost  pig  iron  has  put  the  price  of  plates  away  above 
even  the  high  cost  of  plates  and  much  higher  than  the  price  of 
shapes,  which  normally,  and  even  under  present  conditions,  has  for 
the  same  mill,  the  same  cost  approximately  as  plates.  So  you  can 
not  rely  on  fixing  a  basic  price  to  get  an  even  proportionally 
reasonable  price  of  successive  products,  and  the  illustration  of  plates 
and  shapes  is  one  of  the  very  best  illustrations  you  could  pick  out. 
And  taking  them  as  typical  is  a  mistake;  plate  prices  are  away  out  of 
proportion  to  any  products  of  a  similar  degree  of  manufacture. 

The  Chairman.  Xow.  Doctor,  if  you  should  determine  to  fasten 
upon  this  business  the  character  of  a  public  use,  a  public  utility,  how 
far  do  you  think  we  would  have  to  go  in  fixing  the  prices  of  these 
various  successive  products  in  order  to  insure  justice,  both  to  the 
Government  and  to  the  public? 

Dr.  Walker.  Well.  I  take  it  that  this  proposition  of  price  regida- 
tion.  which  was  injected  into  coal  and  coke  for  example,  and  is  now 
contemplated  with  respect  to  iron  and  steel  products,  may  well  apply 
to  various  other  branches  of  industry,  equally  well,  though  perhaps 
scarcely  to  the  same  degree,  except  as  to  coal  and  coke,  as  to  iron 
and  steel. 

As  I  understand  the  bill,  the  language  is  sufficiently  general,  as 
Mr.  Fairchild  has  pointed  out.  to  leave  no  precise  limits.  I  presume 
that  those  who  drafted  the  bill  had  in  mind  iron  and  steel  products 
as  generally  understoood  in  the  trade;  those,  also,  as  Mr.  Fairchild 
has  pointed  out.  include  in  practice  certain  products  not  wholly  iron 
and  steel,  like  galvanized  wares  and  tinplate  wares.  Xow.  how 
much  beyond  that  it  goes  in  contemplation  of  the  drafters  of  the  bill 
I  do  not  know.  In  contemplation  of  law,  I  think  it  goes  on  in- 
definitely. 

The  Chairmax.  In  order  to  meet  the  present  emergency,  it  would 
be  necessary  to  fix  the  price  of  galvanized  iron,  for  instance,  or  tin- 
plate  ? 

Dr.  Walker.  I  should  think  the  tin  plate  very  probably.  We 
have  not  made  any  special  inquiry  into  that.  We  have  not  paid  so 
much  attention  to  the  more  finished  articles  as  we  have  to  the  heavier 
end.  as  they  call  it ;  but  I  should  anticipate  it  would  be  desirable  for 


PRICE   REGULATIOX    OF   STEEL.  55 

tin  plate,  and  how  much  or  how  far  beyond  that  we  should  go  into 
the  manufactures  of  iron  and  steel  that  are  not  ordinarily  produced 
at  the  plants  Avhich  make  steel,  or  at  rolling-mill  plants,  which  form 
the  steel  into  its  ordinary  commercial  shapes,  I  do  not  know;  that 
requires  knowledge  of  a  good  many  branches  of  the  industry  I  haAe 
not  studied  to  the  same  degree  that  I  have  steel  and  iron. 

The  Chairman.  The  United  States  Steel  Corporation,  does  that 
incorporate  in  its  production  galvanized  iron? 

Dr.  Walker.  Ohi,  yes. 

The  Chairman.  And  tin  plate? 

Dr.  Walker.  Galvanized  sheets  and  tin  plates  are  typical  products 
of  the  iron  and  steel  industry,  as  it  is  understood  in  the  trade  and 
as  reported  by  the  iron  and  steel  industry. 

The  Chair:\iax.  What  do  you  regard  as  the  important  ones  of  the 
successive  productions — first  is  the  iron  ore  or  certain  pig  iron? 

Dr.  Walker.  The  coke  also,  but  that  is  covered  by  the  other  bill. 

The  Chair:man.  First,  the  iron;  second,  the  pig  iron;  third, 
billets? 

Dr.  Walker.  Xo.  sir;  I  would  put  all  semifinished  steel,  which  in- 
cludes blooms,  slabs,  and  billets. 

The  Chairman.  What  does  that  include? 

Dr.  Walker.  Blooms,  slabs,  billets,  and  sheet  bars. 

The  Chairman.  Then  where  do  the  plates  come  in? 

Dr.  Walker.  Plates  are  rolled  from  slabs  ordinarily,  and  rails 
and  shapes  are  rolled 

The  Chairman.  You  would,  then,  put  plates,  rails,  and  shapes; 
what  else? 

Dr.  Walker.  Well,  merchant  bar,  and  skelp  for  rolling  tubes. 

The  Chairman.  What  is  skelp? 

Dr.  Walker,  Large  flats  something  like  sheet  bars  that  are  made 
for  rolling  tubes. 

The  Chairman,  Any  others? 

Dr.  Walker.  Well,  tubes. 

The  Chairman.  AVith  respect  to  this  emergency 

Dr.  Walker.  I  would  certainly  make  it  cover  the  iron  and  steel 
trade,  as  it  is  commonly  classified. 

The  Chairman.  And  that  would  include  how  maiw  products? 
Would  it  include  more  than  10? 

Dr.  Walker.  IMore  than  20,  I  suppose. 

The  Chairman.  But  not  any  in  excess  of  20? 

Dr.  Walker.  All  these  products  ha^'e  numerous  subdivisions — for 
example,  tubes.     There  are  rolled  tubes  and  drawn  tubes. 

The  Chairman.  But  the  tubes  are  made  of  steel  entirely,  are  thev 
not? 

Dr.  Walker.  Well,  they  are  made  of  steel  and  also  of  refined 
iron. 

Commissioner  Davies.  In  that  connection  it  may  be  interesting  to 
know.  Senator,  that  they  had  established  the  prices  of  coke,  iron,  and 
iron  and  steel  products  in  England  by  a  list  of  prices  which  was  pro- 
jected in  1916.  and  of  that  list  I  have  a  copy  here ;  it  takes  five  type- 
written pages  and  has  20  items,  perhaps,  to  each  page,  so  that  in 
order  to  bring  the  relief  which  the  legislation  anticipated  in  Eng- 
land it  was  necessary  for  them  to  fix  the  prices  on  the  coke,  iron,  and 


56  PRICE   EEGULATIOX    OF    STEEL. 

steel  industry  of  at  least  100  products,  and  I  think  that  that  is 
illuminating  as  affecting  this  situation  and  your  question. 

The  Chairman.  Do  you  knoAv  whether  that  was  successful  there? 

Commissioner  Davies.  I  understood  that  it  was  successful  to  a 
degree,  but  that  it  has  required  a  very  large  administrative  force, 
and  I  was  told  the  other  day  by  some  one  connected  with  the  British 
Embassy  that  they  have  extended  their  control  down  to  the  refined 
products  to  a  ver}-  remarkable  degree,  so  that  even  it  extends  to  door 
locks,  and  they  control  that  by  license,  and  they  control  the  industry 
ver}^  closelv. 

Senator  Pomerexe.  My  information  is  also  they  have  increased  by 
this  administration  the  output  of  the  iron  and  steel  mills; 

Commissioner  Davies.  I  think  there  is  no  doubt  of  that. 

Senator  Pomerexe.  I  saw  an  article  on  that  some  time  ago. 

The  Chairmax.  Will  j^ou  insert  this  statement  in  the  record? 

Commissioner  Davies.  I  will  be  very  glad  to  do  so. 

Senator  Pomerexe.  Let  me  ask  you.  in  connection  with  that.  Was 
there  authority  conferred  on  some  administrative  board  to  fix  these 
prices  by  Parliament? 

Commissioner  Davies.  I  think  the  defense  of  the  realm  act  was 
sufficiently  broad,  and  I  think  it  was  the  board  of  trade,  but  I  am  not 
absoluteh^  sure.    I  can  give  you  that  information. 

Senator  Pomerexe.  If  you  have  got  that  act  of  Parliament  and 
those  special  provisions  relating  to  this  subject  of  price  fixing,  I 
should  like  to  have  that  incorporated  in  the  record. 

Commissioner  Davies.  I  would  be  very  glad  to  get  it. 

The  Chairmax.  I  will  state  in  this  connection  that  a  very  thor- 
ough compilation  of  all  the  laws  of  the  beligerent  countries,  alfecting 
these  questions  of  war  administration  generally  was  compiled  by  a 
competent  man  in  Xew  Hampshire :  I  can  not  recall  his  name ;  aided 
by  Profg.  Locke,  formerly  of  the  Williams  and  Mary  College,  I  think, 
and  Senator  Hollis  asked  to  have  it  printed,  but  he  has  not  as  yet 
been  able  to  secure  the  authority  to  print  it.  It  would  be  somewhat 
costly:  it  would  cost  $4,000  or  $5,000. 

Senator  Cu:mmixs.  Yes:  and  it  is  very  important,  too. 

The  Chairmax.  I  wonder  that  it  has  not  been  done. 

Senator  Cummixs.  But  the  trouble  is,  it  is  a  volume  of  about  1,000 
pages. 

Senator  Pomerexe.  I  want  to  ask  the  Federal  Trade  Commission 
and  their  aides  here  to  take  up  that  question  of  contracts  and  give  us 
your  suggestions  as  to  the  method  by  which  3^011  would  treat  them, 
and  let  us  have  the  benefit  of  your  thought. 

Commissioner  Davies.  The  method  by  which  we  would  treat  them? 

Senator  Pomerexe.  Yes;  how  should  this  bill  be  amended  in  that 
respect,  so  as  to  take  care  of  all  outstanding  contracts? 

Commissioner  Davies.  We  would  be  xerj  glad  to  do  so.  Senator. 

Mr.  Chairman,  in  connection  with  the  filing  of  this  British  list, 
may  we  have  the  privilege  of  submitting  for  your  file,  and  as  ex- 
hibits as  a  part  of  this  record,  such  tables  of  costs  as  may  be  helpful 
to  you,  in  our  judgment,  and  submit  them  within  the  course  of  '24 
hours? 

The  Chairmax.  Certainly. 

Senator  Pomerexe.  Let  me  suggest — I  thought  you  had  a  book  here 
containing  the  results  of  the  investigation  by  the  board  of  corpora- 


PKICE   REGULATION    OF   STEEL.  57 

tions  of  the  cost  of  iron  and  steel  in  its  various  stages,  etc..  all 
itemized.  I  think  it  would  be  well  to  have  all  of  those  tables  incor- 
porated in  this  record.    There  are  probably  25  or  30  pages  of  it. 

Senator  Cummins.  There  is  a  series  of  tal)les  some  one  showed  me 
this  afternoon  that  was  most  valuable.  I  do  not  know  that  we  can 
print  them  all,  but  they  are  very  valuable. 

The  CiiAiK.ArAN.  If  you  will  furnish  them,  we  can  print  them.  I 
will  say  that  I  will  have  inserted  in  the  record  some  correspondence 
I  have  upon  this  subject ;  I  will  furnish  it  to  the  reporter.  I  will  also 
state  that  letters  were  sent  to  the  Lackawanna  Steel  Co.,  the  Pitts- 
burgh Steel  Co.,  the  Bethlehem  Steel  Co.,  the  United  States  Steel 
Corporation,  to  C.  M.  Schwab,  chairman  of  the  board  of  the  Beth- 
lehem Steel  Corporation,  and  to  E.  H.  Gary,  president  of  the  Steel 
Corporation,  informing  them  that  the  hearing  on  the  Pomerene  bill 
would  commence  to-day  at  10  o'clock  and  inviting  them  to  be  present. 
This  communication  was  sent  September  18. 

Commissioner  Da  vies.  At  any  time  we  are  at  your  command,  either 
any  of  the  commission  or  any  of  our  experts. 

(The  documents  and  tables  referred  to  in  Commissioner  Davies's 
statements  are  here  printed  in  full,  as  follows:) 


MAXIMUM  PRICES  IN  ENGLAND. 


Per  ton  net 
f.  o.  t. 
Maximum  prices  for  metallurgical  coke.  makers'  ovens. 

£  8.  d. 

Durham  and  Xorthiimberland— blast-furnace  coke 18  0 

Durham  and  Xorthumberhmd — foundry  coke 1  10  6 

Lancashire — blast-furnace  coke 1  5  8 

South  Wales  and  Monmouthshire — blast-furnace  coke 1  10  0 

South  "Wales  and  ^Monmouthshire — foundry  coke 2  3  0 

South  Yorkshire — blast-furnace  coke 1  5  8 

Staffordshire  and  Midland  Counties — blast-furnace  coke 1  5  8 

West  Yorkshire — blast-furnace  coke 1  5  8 

, ,      .  ,  Per  ton  net 

jlaxiDinm  pnccs  for  pig  iron.  f.  o.  t. 

Hematite  pig  iron  :                                                                                                   makers'  works. 

East  coast —  £  «■  d. 

Mixed.  Nos.  1.  2,  and  3 6  2  6 

Special    quality,    containing    under    .04    of    phophorus    and 

sulphur 6  7  6 

Special    ciuality,    containing   under    .03    of   phosphorus    and 

sulphur 6  15  6 

Special    quality,    containing   under    .02    of   phosphorus    and 

sulphur 7  0  0 

Scottish — 

Mixed.  Nos.  1.  2,  and  3 6  2  6 

Special    quality,    containing   under    .03    of   phosphorus    and 

sulphur 7  10  0 

Welsh- 
Mixed.  Nos.  1.  2,  and  3 6  2  6 

Special    quality,    containing   under    .03    of   phosphorus    and 

sulphur 6  15  6 

Special   quality,    containing   under   .02   of   phosphorus    and 

sulphur 7  0  0 

West  coast — 

Mixed.  Nos.  1.  2,  and  3 6  7  6 

Special    quality,    containing   under    .03    of   phosphorus    and 

sulphur 6  15  6 

Special    quality,    containing    under    .02    of   phosphorus    and 

sulphur 7  0  0 

Cleveland  pig  iron : 

No.  ] 1 4  11  6 

Other  grades 4  7  6 

Derbyshire.  Leicestershire,  and  Nottinghamshire  pig  iron : 

No.  4  forge 4  10  0 

No.  3  foundry 4  12  6 

No.  2  foundr.v 4  14  6 

No.  1  foundry 4  16  6 

Basic 4  17  6 

Lincolnshire  pig  iron :  Basic  or  foundry 4  12  6 

Northamptonshire  pig  iron : 

No.  4  forge 4  7  6 

No.  4  foundry 4  9  0 

No.  3  foundry 4  10  0 

No.  2  foundry 4  12  0 

No.  1  foundry 4  14  0 

Basic 4  17  6 

58 


PRICE   REGULATIOX   OF    STEEL,  59 

Per  ton  net 
f .  o.  t. 

T^-     j.^    n,    ^      ,  -  .  .  makers'  oveni5. 

iSorth  Staffordshire  pig  iron  :  £  ■  s.  d. 

No.  4  forge 4  15  q 

Foundry  Nos 4  17  6 

Basic. 4  17  6 

South  Staffordshire,  Shropshire,  and  Worcestershire  pig  iron: 

"  Part  mine  "  forge 4  15  0 

"  Part  mine  "  foundry 4  17  6 

Common  Staffordshire 4  10  0 

"All  mine "  forge 5  15  0 

"All  mine  "  foundry 6  0  0 

"  Warm  air  "  forge 7  5  0 

"  Warm  air  "  foundry 7  15  0 

Special  quality  Lord  Dudley's  cylinder 8  7  6 

Cold  blast  iron 9  2  6 

Scottish  foundry  and  forge  pig  iron : 

Nos.    3.    4.    and    lower     grades    of    Monkland,    Dalmellingtou, 

Englinton,  and  Govan 5  14  0 

Nos.  3,  4,  and  lower  gi-ades  of  all  other  brands 5  15  6 

No.  1  quality  (Scottish)  to  be  5s.  per  ton  above  these  prices. 

Maximum  basis  prices  for  steel."^  Per  ton  net 

f.  o.  t. 
makers'  works. 
£       8.     d. 
Steel  ship  bridge  and  tank  plates,  subject  to  list  of  extras  "A"  dated 

Jan.  11,  1916 11     10     0 

Steel  ship  bridge  and  tank  thin  plates : 

Under  I  inch  thick  (except  0.24  inch  (9.7  pounds  Admiralty,  for 
which   see   List   "A"')    down   to   and   including   fs   inch   thick 

(including  7*  pounds  Admiralty) 14     10     0 

Under  h  inch  thick  (and  under  7*  pounds  Admiralty)  down  to 

and  including^  inch  thick  (and  5  pounds) 16 

L'nder  I  inch  thick  down  to  and  including  sV  inch  thick 17 

Under  f^  inch  thick  down  to  and  including  -h  inch  thick 17 

Boiler-quality  basis  £1  per  ton  over  the  above. 
Subject  to  list  of  extras  "B,"  dated  Jan.  11,  1916. 
Steel  S.  M.  boiler  plates :  Subject  to  list  of  extras  "  C,"  dated  Jan. 

11.  1916 12     10     0 

Steel  angles  and  bulb  angles : 

Angles  7  to  11  united  inches  (including  6  inches  by  6  inches)  | 

inch  thick  and  up 

Bulb  angles  9  to  12  united  inches   (including  9  by  32  inches)   | 

inch  thick  and  up . 11       2     6 

Subject  to  list  of  extras  "  D,"  dated  Jan.  11,  1916,  v>iiich  covers 
steel  angles,  bulbs,  zeds,  channels,  tee  bulbs,  tees,  and  flats. 

Small  steel  angles,  tees,  and  flats:  Angles.  Tees. 

L'nder  6   inches  down  I0  and   including  4  united    £      s.    d.  £      s.     d. 

inches 14       0     0         15       0     0 

Under  4  inches  down  to  and  including  3   united 

inches 14     10     0         15     10     0 

Under  3  united  inches  to  and  including  2  united 

inches 15      0    0        16      0    0 

Flats  5  inches  and  under  down  to  and  including  11  inches 15     10     0 

Subject  to  list  of  extras  "  E  "  dated  Jan.  11,  1916. 
Steel  rounds,  squares,  and  hexagons: 

Bars,  3  inches  to  54  inches  without  tests 12     10     0 

Bars,  3  inches  to  5*  inches  with  tests 13      0    0 

Subject  to  list  of  extras  "  F  "  dated  Jan.  11,  1916.* 

"  Additional  classes  of  steel.  See  Notice,  Jan.  1,  1917,  of  modification  of  general  permit, 
p.  553. 

*  List  of  extras  "  F."  From  this  list  Nos.  6  and  13  are  to  be  omitted.  See  Notice, 
Jan.  1,  1917,  p.  553. 


0 

0 

0 

0 

10 

0 

60  PRICE   REGULATION    OF   STEEL. 

Per  ton  net 
f.  o.  t. 
makers'  ovens. 
Small  steel  rounds,  squares,  and  hexagons :  £      s.     d. 

Rounds    and    squares   under    3   inches    down    to    and    including 

f  inch  without  tests 15       0     0 

Rounds    and    .squares    under    3    inches    down    to    and    including 

f  inch  with  tests 15     10     0 

Hexagons   under   3    inches   to    'i    inch    across   flats,    fl   per   ton 

over  the  ahove. 
Subject  to  list  of  extras  "  G  "  dated  Jan.  11,  1916. 
Steel    joists,    subject    to   list    of    extras    marlved    "H"    dated    .Jan. 

11,   191G 11       2     6 

Rails,  60  pounds  per  yard  and  over 10     IT     6 

Rails,  50  pounds  per  yard  and  over,  but  under  60  pounds  per  yard—  11       0     0 
New  slightly  defective  rails,  5  s.  per  ton  less  than  these  prices. 

Sheet  and  tinplate  bars 10       7     6 

Blooms  and  billets  for  rerolling  (ordinary  quality) 10       7     G 

Blooms  and  billets  for  rerolling  (special  quality) 11       0     0 

Per  ton  net 

f .  o.  t. 

at  point  of 

purchase. 

£       «.     d. 

Relayable  rails,  50  pounds  per  yard  and  over ^^  10       0     0 

The  above  prices  for  steel  are  subject  to  extras  not  exceeding  those  contained 
in  the  list  published  by  tlie  ministry  of  munitions  on  the  1st  day  of  Novomljer, 
1916,  entitled  "  List  of  authorized  extras,  chargeable  on  steel  material,"  which 
includes  lists  A,  B,  C,  D,  E,  F,  G,  H,  above  referred  to,**  copies  of  which  can  be 
had  on  api)lication  to  the  Director  of  Steel  Production,  Ministry  of  [Munitions 
of  War,  "Whitehall  Place,  London,  S.  W.  1. 

Steel  scrap  sold  rcithont  yuaranteed  analysis.^ 

Per  ton 
delivered 
buyers'  works. 
£         8. 

Heavy  steel  melting  scrap 5  10 

Special  handy  heavy  steel  melting  scrap  suitable  for  crucible  use 5  15 

Steel  turning!-'  and  borings 2  15 

Special  short  extra  heavy  steel  turnings 3  15 

Maximum  basis  prices  for  bar  iron. 

Per  ton  net 
f.  o.  t. 
malvers'  works. 
£       s. 

Standard  quality,  ordinary  sizes  and  merchant.s'  lengths 13     15 

Per  ton 
less  2i  per  cent 

fro.  t. 
makers'  works. 
£       s. 
Marked  bars 15     10 

Sul)ject  to  extras  for  special  sizes  r.nd  qualities  not  exceeding  those  contained 
in  the  list  pul)lished  by  the  ministry  of  munitions  on  the  1st  day  of  November, 
1916,  entitled  "  List  of  authorized  extras  chargeable  on  bar  iron." 

To  the  above-mentioned  prices  for  steel  and  bar  iron  a  sum  not  exceeding 
2J  per  cent  on  sucli  prices  may  be  added  in  the  case  of  sales  by  persons  other 
than  the  makers. 

Stockholders  of  steel  and  bar  iron  are  permitted  to  sell  from  their  stock  at 
the  prices  above  mentioned  plus  a  maximum  addition  of  £3  per  ton  to  cover 
carriage  and  other  charges,  including  loading  outward  from  their  stores. 

This  £3  per  ton  will  include  the  merchant's  commissions  of  2^  per  cent 
and  is  not  in  addition  thereto. 

"  Relayable  rails.  See  footnote  (")  to  p.  551  relating  to  maximum  prices  for  second- 
hand rails. 

"*  List  of  extras  :  The  Notice  of  the  Minister  of  Munitions,  dated  Jan.  1,  1917,  printed 
at  p.  553,  directs  that  extras  Nos.  6  and  13  shall  be  omitted  from  list  F.  Further  lists 
of  extras  J,  K,  and  L,  were  Issued  Jan.  1,  1917. 

*  Steel  scrap  :  For  maximum  prices  for  steel  scrap  If  sold  ithout  guaranteed  analysis, 
see  notice  of  Jan.  1.  1917.  of  addition  to  general  permit  (p.  55'2).  and  if  with  such  guar- 
anteed analysis  further  notice  of  same  date   (p.  533)    of  modification  of  general  permit. 


PRICE   EEGULATION   OF    STEEL. 


61 


Stockholders  are  permitted  to  resell  finished  steel  rolled  by  manufacturers 
from  steel  purchasetl  by  them  at  prices  n(jt  exceedius  the  "actual  purchase 
j>rice  to  the  stockholders  plus  the  above-mentioned  £3  per  ton,  provided  that 
they  keep  stock  ledgers  showing  all  purchases  and  sales  of  such  material,  so 
that  the  prices  of  such  purchases  and  sales  can  at  any  time  be  verified  by  the 

CONNELLSVILLE  COKE   PKICES   KOK   10   YEARS. 

"We  present  below  tables  showing  monthly  prices  of  prompt  shipment  Connells- 
ville  furnace  and  foundry  coke  for  10  ycMrs,  1901  to  1916,  inclusive,  averaged 
from  weekly  quotations  in  il'e  Iron  Age: 

Average  prices  of  prompt  ConnelUviUe  furnace  coke,  per  net  ton  at  oven. 


1902 


1903 


1904 


1905 


1906 


1907 


1908 


January. . . 
February . 

March 

April 

May 

Jime 

July 

August 

September 
October. . . 
November 
December. 


$1. 75 
1.75 
1.90 
2.00 
2.00 
1.875 
1.75 
1.75 
1.75 
1.77 
1.95 
2.14 


$2.90 
2.50 
2.875 
2.50 
2.50 
2.69 
3.00 
3.875 
5.00 
8.00 
6.00 
6.00 


$5.00 
5.00 
5.00 
4.20 
3.50 
3.00 
2.50 
2.25 
2.20 
1.90 
1.75 
1.625 


$1.60 
1.525 
1.65 
1.60 
1.50 
1.45 
1.45 
1.45 
1.45 
1.475 
2.04 
2.125 


$2.46 
2.56 
2.43 
2.075 
1.875 
1.82 
1.81 
1.80 
2.10 
2.61 
2.95 
2.79 


$2. 625 
2.14 
2.24 
2.45 
2.46 
2.325 
2.51 
2.76 
2.85 
2.84 
3.13 
3. 525 


$3.53 
3.50 
3.02 
2.725 
2.16 
1.89 
2.40 
2.62 
2.825 
2.85 
2.41 
2.06 


$1.92 
1.86 
1.725 


1.57 

1.50 

1.55 

1.575 

1.50 

1.50 

1.53 

1.725 

1.82 


1909 


1910 

1911 

1912 

1913 

1914 

1915 

$2.55 

$1.40 

$1.82 

$3.88 

$1.85 

$1.50 

2.125 

1.45 

1.78 

2.52 

1.85 

1.50 

2.00 

1.55 

2.125 

2.40 

1.90 

1.50 

1.775 

1.59 

2.39 

2.15 

1.86 

1.50 

1.66 

1.50 

2.28 

2.13 

1.77 

1.50 

1.65 

1.42 

2.02 

2.11 

1.75 

1.56 

1.59 

1.44 

2.21 

2.45 

1.75 

1.64 

1.57 

1.46 

2.21 

2.50 

1.70 

1.50 

1.60 

1.50 

2.375 

2.29 

1.65 

1.59 

1.50 

3.41 

2.08 

1.60 

2.03 

1.50 

1.52 

3.94 

1.82 

1.52 

2.28 

1.44 

1.60 

4.00 

1.75 

1.50 

2.64 

1916 


January $1. 59 

February :  1. 59 

March 1. 60 

April 1. 60 

May 1.575 

June 1. 525 

July 1.58 

August 1. 66 

September 2. 39 

October 2.  76 

November 2. 74 

December 2. 67 


$2.94 
3.38 
3.47 
2.41 
2.30 
2.49 
2.75 
2.80 
2.94 
4.88 
6.90 
8.38 


Average  price  of  prompt  Connellsville  foundry  coke,  per  net  ton  at  oven. 


1901 

1902 

1903 

1904 

1905 

1906 

1907 

1908 

January 

$2.25 

$3.17 

$6.50 

$2.18 

$2.38 

$3.42 

$4.25 

$2.45 

February 

2.31 
2.50 

3.50 
3.50 

6.50 
6.50 

2.10 
2.25 

2.68 
2.75 

2.65 
2.78 

4.00 
3.65 

2.39 

March 

2.25 

April 

2.50 

3. 125 

5.50 

2.15 

2.70 

2.95 

3.31 

2.22 

Mav 

2.50 

3.15 

4.50 

2.00 

2.55 

2.81 

3.00 

2.03 

Jime 

2.375 

2.875 

3.50 

1.90 

2.40 

2.65 

3.00 

2.00 

Julv 

2.25 

3.20 

3.25 

1.80 

2.35 

2.79 

3.00 

2.00 

August 

2.25 

4.25 

3.00 

1.75 

2.25 

3.00 

3.08 

1.92 

September 

2.25 

6.00 

2.875 

1.85 

2.50 

3.19 

3.20 

1.90 

October 

2.25 

9.00 

2.875 

2.00 

3.00 

3.31 

3.25 

2.10 

November 

2.31 

7.00 

2.50 

2.25 

3.50 

4.00 

2.75 

2.20 

December 

2.39 

7.00 

2.25 

2.35 

3.50 

4.125 

2.50 

2.25 

1909 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

$2.00 
1.95 
1.95 
1.86 
1.85 
1.80 
2.00 
1.95 
2.55 
2.90 
3.25 
3.20 

$2.90 
2.70 
2.60 
2.45 
2.20 
2.17 
2.15 
2.15 
2.12 
2.10 
2.05 
1.97 

$1.90 
2.10 
2.05 
2.00 
1.81 
1.76 
1.825 
1.85 
1.85 
1.81 
1.85- 
1.90 

$1,975 
2.09 
2.56 
2.69 
2.58 
2.40 
2.40 
2.40 
2.54 
3.65 
4.25 
4.50 

$4.40 
3.25 
3.00 
3.00 
2.85 
2.80 
2.70 
2.90 
2.90 
2.81 
2.60 
2.50 

$2.50 
2.50 
2.45 
2.40 
2.40 
2.32 
2.22 
2.25 
2.10 
2.00 
1.92 
1.90 

$2.00 
2.00 
2.00 
2.00 
2.00 
2.00 
2.05 
2.00 
2.07 

'"i'.m 

2.95 

$3.50 

3.50 

March 

3.75 

April 

3.56 

May 

3.25 

Jime 

3.25 

July 

3.25 

3.30 

3.31 

October 

3.88 

November 

7.10 

December 

8.63 

62 


PRICE    REGULATION    OF    STEEL. 


Attention  should  be  called  to  the  peculiar  conditions  prevailing  in  the  coke 
market  in  the  last  half  of  1902  and  the  first  half  of  1903.  In  all  this  period 
coke  prices  were  seriously  affected  by  the  extraordinary  demand  for  coke  caused 
by  the  scarcity  of  anthracite  coal,  resulting  from  the  great  strike  of  anthracite- 
coal  miners  which  began  in  the  spring  of  1902  and  was  not  settled  until  late 
in  that  year.  For  several  months  blast  furnaces  and  foundries  were  greatly 
hampered  in  their  operations  l)y  inability  to  secure  a  regular  supply  of  fuel. 
Prompt  furnace  and  foundry  coke  at  this  time  sold  as  high  as  .$11  per  ton  at 
oven,  and  it  is  possible  that  even  higher  prices  may  have  been  realized.  Blast 
furnaces  were  often  banked  for  a  week  or  two  awaiting  coke  deliveries,  and 
many  foundries  ran  intermittently.  Coke  was  imported  to  some  extent  for  the 
use  of  blast  furnaces  and  foundries  located  near  the  sealjoard,  and  foundry  coke 
was  shipped  all  the  way  to  Chicago  from  Colorado.  The  quotations  which  are 
above  given  for  this  period  are  therefore  to  be  regarded  as  to  some  extent 
conjectural. 

MALLEABLE    BESSEMER    PIG-IKON    PRICES,    CHICAGO. 

The  table  lielow  shows  monthly  prices  of  malleable  Bessemer  pig  iron  at 
Chicago  from  1901  to  1916,  inclusive,  averaged  from  weekly  quotations  in  the 
Iron  Age,  per  ton  of  2,240  pounds : 


January 

February . , 

March 

April 

May 

June 

July 

August 

September 
October... 
November. 
December. 


1901 


$15. 00 
14.87 
15.75 
16.50 
15.  45 
16.25 
16.25 
16.30 
16.00 
15.75 
15.81 
17.00 


1902 

1903 

$17.  20 

$23.  24 

17.75 

23. 00 

18.50 

22.87 

19.50 

21.82 

21.80 

20.77 

22.00 

19.50 

22.75 

18.  66 

23.00 

17.59 

24.00 

16.94 

23.90 

16.25 

23.  87 

15.00 

24.00 

14.50 

1904 


$14.  50 
14.50 
14.00 
14.00 
14.00 
13.85 
13.75 
13.75 
13.50 
13.75 
15.87 
16.50 


1905 

1906 

$17.  50 

$19.  37 

17.50 

19.19 

17.50 

19.00 

17.50 

IS.  77 

17.37 

18.35 

16.65 

18.00 

16.37 

18.37 

16.50 

18.95 

16.56 

20.12 

17.37 

21. 32 

19.00 

24.16 

19.50 

26.00 

1907       I  1908 


$26. 00 
26.00  1 
26.25 
26.50 
26.60 
'?6.25 
25.62 
24.80 
24.40 
22.40 
20.25 
18.75 


$18.  60 
18.  25 
17.50 
17.  .50 
17.  56 
17.37 
17.  .50 
17.50 
17.26 
17.00 
17.00 
17.00 


1909 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

$17.  09 
16.75 
16.50 
16.50 
16.66 
16.50 
16.90 
17.12 
18.50 
18.50 
19.00 
19.00 

$19.  00 
19.00 
18.40 
17.50 
17.06 
16.75 
16.56 
16.50 
16.40 
16.06 
16.00 
16.00 

$15.  50 
15.50 
15.50 
15.25 
15.00 
15.00 
15.00 
14.80 
14.50 
14.50 
14.35 
14.35 

$14. 35 
14.14 
14.00 
14.00 
14.40 
14.50 
14.50 
15.10 
16.25 
17.10 
17.87 
18.00 

$17. 90 
17.31 
17.25 
17.  05 
16.00 
15.62 
14.65 
15.00 
15.00 
15.20 
14.87 
14.63 

$13.  88 
13.94 
14.25 
14.25 
14.06 
13.88 
14.00 
14.00 
13.25 
13.00 
12.88 
12.90 

$13. 00 
13.00 
13.  00 
13. 00 
13.00 
13. 00 
13.00 
13. 44 
14.30 
15.25 
17.13 
18.20 

$19. 00 

19.00 

19.40 

19.50 

19.50 

June 

19.50 

Jul  V 

19.50 

19.00 

September 

19.00 

19.88 

November  

25.  80 

29.50 

'  From  this  time  on  the  prices  are  given  as  at  furnace  near  Chicago,  and  35  to  50  cents  per  ton  should  be 
added  to  get  the  price  delivered  to  Chicago  foun'^ries. 

MAHONING   AND    SHENANGO   FOUNDRY   IRON    PRICES. 

In  the  follo\^'ing  table  are  presented  the  monthly  average  prices  of  No.  2 
foundry  pig  iron  at  Valley  furnace,  namely,  at  furnaces  in  the  ]\Iahoning 
Valley,"  Ohio,  and  the  Shenango  Valley,  Pa.,  from  1901  to  1916,  inclusive, 
averaged  from  weekly  quotations  in  The  Iron  Age: 


1901 

1902 

1903 

1904 

1905 

1906 

1907 

1908 

$13.20 
13.16 
13.97 
14.10 
14.10 
13.  66 
13.20 
12.97 
13.10 
13.60 
14.41 
15.20 

$15.60 
16.20 
17.76 
19.30 
19.92 
20.60 
21.10 
22.35 
22.30 
22.17 
23.25 
2L25 

822. 30 
21.95 
22.00 
20.99 
20.32 
19.37 
18.02 
16. 34 
14.98 
14.09 
13.32 
13.22 

$13.00 
12.47 
12.91 
13.01 
12.47 
11.96 
11.67 
11.87 
11.71 
12.50 
14.60 
16.19 

$16. 12 
16.00 
16.00 
16.00 
15.55 
14.81 
14.25 
14.15 

14.  56 

15.  .50 

16.  83 
17.35 

$17. 31 
17.25 
17.12 

10. 50 
16.30 
16.19 
16.44 
17.71 
19.  56 
21. 35 
23.87 
24.00 

$24.60 
24.12 

24.  00 
24.00 

25.  00 
25.  12 
22.80 
22.  50 
20.87 
19.80 
19.00 
17.37 

$16.80 

16. 00 

March 

15. 56 

April 

15.15 

May 

14.87 

15.00 

July 

14.80 

14.50 

14.47 

14.36 

15.25 

15.50 

PRICE   REGULATION   OF   STEEL. 


63 


1909 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

January 

$15.44 
15.06 
14.50 
14.00 
14. 19 
14.90 
15.19 
15. 31 
l.-).  75 
17.12 
17.  2.i 
17.00 

$17. 00 
16.  (;9 
16. 10 
1.5. 62 
15.31 
14.75 
14.31 
14.15 
13.75 
13.94 
13.90 
13.75 

813.75 
13.75 
13. 75 
13. 75 
13. 75 
13.  .56 
13.50 
1.3.50 
13.44 
13.37 
13. 20 
13.00 

$13.00 
13.00 
13. 12 
13. 25 
13.25 
13.25 
13.37 
13. 69 
14.44 
16.10 
16. 94 
17.25 

$17.50 
17.00 
16.  (i9 
15.55 
14.62 
14.06 
13.87 
14.00 
14.00 
13.84 
13.50 
13.50 

$12. 85 
13. 19 
13.  25 
13.  25 
13. 00 
13.  00 
13.00 
13.00 
13.  (K) 
12.  W) 
12.75 
12.75 

$13.00 
13.00 
13.00 
12.  75 
12.94 

12.  69 
12. 70 

13.  62 
14.72 
14.87 
1.5.  .50 
18.30 

$18.50 

18.31 

March 

18.50 

April 

18.50 

May 

18.20 

June 

18.13 

Julv....                

18.25 

August 

18.25 

September 

18.39 

October 

20.00 

25.00 

December 

30.75 

Iron  and  Steel  Prices  for  19  Years. 

MONTHLY    averages    COMPUTED    FROM    THE    WEEKLY    MARKET    QUOTATIONS    OF    "  THE 
IRON   age"   in   the  PERIOD   1898-1016    (WITH    SUPPLEMENT). 

Acconiijanying  this  issue  of  Tlie  Iron  Age  is  our  annual  cliart,  in  whidi  lines 
are  plotted  to  indicate  the  course  of  prices  for  pig  iron,  Bessemer  steel  billets, 
and  some  leading  forms  of  finished  iron  and  steel  in  the  19  years  ended  with 
1916.  The  diagrams  are  based  on  monthly  averages  of  prices  quoted  week  by 
week  in  our  market  reports  from  the  leading  selling  centers.  The  table  below, 
which  gives  the  monthly  average  prices  on  which  the  chart  Is  based,  includes 
aLso  the  average  prices  of  No.  2  X  foundry  pig  iron  at  Philadelphia,  which  Iiave 
not  been  put  in  graphic  form. 

Bessemer  pig  iron  ot  Pittsburgh,  dollars  per  gross  ton  {2,240  pounds.) 


1898 

1899 

9.87 

10.87 

10. 05 

11.60 

10.39 

14.59 

10.41 

15.03 

10.30 

16.20 

10.34 

18.51 

10.  25 

20.65 

10.35 

21.75 

10.78 

23.43 

10.36 

24.18 

10.15 

24.78 

10.58 

24.90 

1901 

1902 

13.15 

16.70 

14. 43 

16. 93 

16.31 

17.37 

16.75 

18.75 

16.30 

20.75 

16.00 

21.56 

16.00 

21.60 

15.75 

21.62 

15.75 

21.75 

15.89 

21.75 

16.00 

21.68 

16.31 

21.75 

1904 

1905 

13.91 

16. 85 

13.66 

16. 41 

14.25 

16. 35 

14.18 

16.35 

13.60 

16.16 

12.81 

16.65 

12.40 

14.85 

12.81 

15.20 

12.  as 

15.91 

13.10 

16.54 

14.85 

17.85 

16.65 

18.35 

1906 


January . . . 
February.. 

March 

April 

May 

June 

July 

August 

September 
October... 
November, 
December . 


24. 99 
24.80 
24.72 
24.70 
21.00 
19.72 
16.75 
15.60 
13.87 
13.06 
13.43 
13.43 


22.15 
21.45 
21.85 
21.28 
20.01 
19.72 
18.89 
18.35 
17.22 
16.05 
15.18 
14.40 


18.35 
18.35 
18.28 
18.19 
18.10 
18.23 
18.41 
19.00 
19.54 
20.35 
22.85 
23.75 


1907 

1908 

1909 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

January 

23.15 
22.85 
22.85 
23.35 
24.01 
24.27 
23.55 
22.90 
22.90 
22.00 
20.65 
19.34 

19.00 
17.90 
17.86 
17.49 
16.93 
16.90 
16.83 
16.23 
15.90 
15.71 
16.59 
17.40 

17.34 
16.78 
16.25 
15.78 
15.84 
16.05 
16. 46 
17.03 
18.05 
19.53 
19.90 
19.90 

19.90 
19.34 
18.60 
18.27 
17.52 
16. 60 
16. 40 
16. 09 
15.90 
15.90 
15.82 
15.90 

15.90 
15.90 
15.90 
15. 90 
15.90 
15.90 
15.90 
15. 90 
15.90 
15.  44 
15.00 
15.03 

15.05 
14.90 
1,5.09 
1,").  15 
1.5. 13 
15.15 
15.20 
15. 46 
16.15 
17.80 
18.02 
18.15 

18.15 
18. 15 
18.15 
17.90 
17.70 
17.14 
16.70 
16. 52 
16. 65 
16.  W 
16.02 
15.77 

14.96 
1.5.09 
15.09 
14.90 
14.90 
14.90 
14. 90 
14.90 
14.90 
14.84 
14.59 

„.:. 

14.59 
14.55 
14.55 
14.55 
14.59 
14.70 
14.95 
15.95 
16.85 
16.95 
17.51 
19.65 

21.58 

Fel)ruary 

21.51 

March 

21.75 

21.95 

May 

21.95 

June 

21.95 

July 

21.95 

August 

21.95 

22.26 

October 

24.08 

November 

30.15 

35.58 

64 


PRICE   REGULATION    OF   STEEL. 


Bessemer  pig  iron  at  Pittsburgh,  dollars  per  gross  ton  (2,240  pounds) — Contd. 

BESSEMER  STEEL  BILLETS  AT  PITTSBURGH,  DOLLARS  PER  GROSS  TON.    (HIGH  858: 

PRESENT  $52.) 


January 14. 93 

February 15. 06 

March 15.  25 

April 15. 06 

May 14. 85 

June 14. 65 

July 14. 50 

August !  15. 85 


September. 

October 

November. 
December . 


16.00 
15.56 
15.06 
15.80 


1899 


16.62 
18.00 
24.30 
25.37 
26.75 
30.10 
33.12 
35.40 
38.87 
38.75 
36.50 
33.75 


34.50 
34.87 
33.00 
32.00 
28.90 
27.25 
21.00 
18.20 
16.93 
16.50 
18.95 
19.75 


1901 


19.75 
20.31 
22.88 
24.00 
24.00 
24.38 
24.00 
24.20 
24.88 
26.70 
27.00 
27.50 


27.50 
29.37 
31.26 
31.50 
32.20 
32.37 
31.75 
31.06 
29.50 
29.70 
28.50 
29.12 


1903 


29.60 
29.87 
30.62 
30.25 
30.37 
28.87 
27.00 
27.00 
27.00 
27.00 
24.00 
23.00 


1904 

1905 

23.00 

22.75 

23.00 

23.50 

23.00 

24.00 

23.00 

24.00 

23.00 

23.50 

23.00 

22.00 

23.00 

22.00 

2-3.00 

24.00 

20.00 

25.00 

19.50 

25.62 

20.25 

26.00 

21.20 

26.00 

26.25 
26.50 
26.70 
27.00 
26.40 
26.63 
27.25 
27.80 
28.00 
28.00 
28.88 
29.50 


1907 


January 29.40 

February 29.50 


March. 

April 

May 

June 

July 

August 

September. 

October 

November. 
December.. 


29.00 
30.12 
30.30 
29.62 
30.00 
29.25 
29.37 
28.20 
28.00 
28.00 


1908 


28.00 
28.00 
28.00 
28.00 
28.00 
25.75 
25.00 
25.00 
25.00 
25.00 
25.00 
25.00 


25.00 
25.00 
23.00 
23.00 
23.00 
23.00 
23.50 
24.13 
25.00 
26.25 
27.13 
27.50 


1910 


27.50 
27.50 
27.50 
26.75 
26.12 
25.30 
25.00 
24.62 
24.40 
23.75 
23.30 
2.3.00 


1911 


23.00 
23.00 
23.00 
23.00 
22.  (iO 
21.00 
21.00 
21.00 
20.75 
20.00 
19.50 
19.25 


1912 


20.00 
20.00 
19.75 
20.00 
20.80 
20.87 
21.50 
22.12 
2.3.62 
20. 00 
27.00 
27.00 


1913 


28.30 
28.50 
28.50 
28.50 
27.37 
26.50 
26.60 
26.00 
24.87 
23.30 
21.00 
20.00 


1914 


20.13 
21.00 
21.00 
20.80 
20.00 
19.50 
19.00 
20.25 
21.00 
20.00 
19.25 
19.00 


1915 


19.25 
19.50 
19.70 
20.00 
20.00 
20.50 
21.38 
23.13 
24.10 
24.63 
26.  50 
30.60 


1916 


32.00 
33.50 
42.40 
45.00 
45.00 
43.50 
41.00 
44.20 
45.00 
46.25 
52.00 
57.50 


BASIC  PIG  IRON,  F.  O.  B.  MAHONING  OR  SHENANGO  VALLEY  FURNACE,  DOLLARS 
PER  GROSS  TON.    (HIGH  $— ;  PRESENT  $— .) 


1898 

1899 

1900 

1901 

1902 

1903 

1904 

1905 

1906 

January 

15.46 
15.25 
15.  55 
15.06 
15.06 
14.60 
14.00 
14.32 
14.86 
15.25 
16.87 
16.75 

17  06 

February 

16.82 

March 

16  85 

April 



16  88 

M^y 

17.00 

June 

11.76 
1L20 
11.69 
11  60 

16  94 

July 

17. 12 

August 

17  70 

September 

18  44 

October 

12.19 
14.00 
15.70 

19.55 

November 

21  37 

December 

21.50 

January. . . 
February . 

March 

April 

May 

June 

July 

August 

September 
October  . . 
November 
December. 


1907 


21.90 
22.00 
2L50 
21.50 
22.90 
22.40 
2L75 
21.25 
20.06 
19.50 
18.12 
17.50 


1908 


1909 


16.90 
15.97 
15.62 
15.25 
14.91 
15.25 
14.51 
14.69 
14.43 
14.04 
14.72 
15.60 


15.50 
15.12 
14.94 
14.25 
14.12 
14.62 
15. 05 
15.25 
15.90 
16.94 
17.26 
17.05 


1910 


16.87 
16.31 
16.00 
15.94 
15.19 
14.70 
14.50 
14.12 
13.70 
13.15 
13.25 
13.40 


1911 


13.25 
13.65 
13.75 
13.75 
13.32 
13.05 
13.12 
13.00 
12.80 
12.52 
12.42 
12.25 


12.35 
12.25 
12.81 
13.00 
13.00 
13. 12 
13.40 
13.  94 
14.37 
15.98 
16.37 
16.50 


1913 


16.41 
16.30 
16.11 
15.87 
15.15 
14.50 
14.37 
14.06 
14.00 
13.90 
13.  09 
12.71 


1914 


12.50 
13.19 
13.00 
13.00 
13.00 
13.00 
13.00 
13.00 
13.00 
12.81 
12.48 
12.50 


1915 


12.50 
12.50 
12.50 
12.50 
12.50 
12.50 
12.74 
14.06 
14.75 
15.00 
15.  75 
17.50 


1916 


17.81 
17.69 
18.20 
18.13 
18.00 
18.00 
18.00 
18.00 
18.31 
19.88 
25.10 
30.00 


PRICE   REGULATION    OF    STEEL. 


65 


Jiessemer  pig  iron  at  Pittsburgh,  dolUirs  per  gross  ton  (2,2^0  pounds) — Contd. 
SOUTHERN  NO.  2  FOUNDRY  PIG  IRON  AT  CINCINNATI,  DOLLARS  PER  GROSS  TON. 


1898 

1899 

1900    j 

1 

1901 

1902    1 

1903 

1904 

1905 

1906 

January 

9.50 
9.25 
9.25 
9.25 
9.37 
9.30 
9.25 
9.37 
9.55 
9.75 
9.75 
9.90 

10.31 
11.69 
13.75 
14. 50 
14.56 
16.00 
17.56 
18.35 
19.94 
20.  75 
20.75 
20.75 

1 
20.69  i 
20.50  1 
20.30  ' 
20.19  I 
19.75 
18.75 
16.81 
14.25  ! 
13.62  i 
12.87  j 
12.95 
13.75 

13.45 
13.12 
14.00 
14.  .W 
13.85 
13.37 
13.00 
13.00 
13.06 
13.75 
14.00 
14.25 

14.55 
14.75 
14.75 
16.87 
18.35 
20.19 
20.75 
23.06 
25.00 
25.65 
23.62 
22.44 

21.65 
21.50 
21.37 
20.15 
18.87 
17.75 
16.15 
15.19 
14.75 
13.50 
12.00 
12.05 

12.37 
12.12 
12.10 
12.50 
12.25 
11.80 
11.81 
12.00 
12.00 
12.81 
15.19 
15.85 

16.25 
16.25 
16.25 
16.25 
15.81 
14.65 
13.94 
14.40 
14. 37 
15.31 
16.60 
16.75 

16.75 

16.75 

March 

16.65 

April 

16.63 

May 

16. 75 

June 

16.44 

July 

16.06 

August 

17.30 

September '. 

18.69 

October 

20.00 

November 

23.38 

December 

25.00 

1907 

1908 

1909 

1910 

1 

1911 

1912     ' 

1913 

1914 

1915 

1916 

Januarv 

26.00 
26.00 
26.00 
25.06 
24.25 
24.10 
23.  85 
23.00 
21.50 
20.95 
19.50 
17.00 

16. 15 
15.75 
15.50 
15.20 
14.75 
15. 25 
15.00 
15.25 
15.65 
15.75 
16.00 
16.25 

16.  25 
16.  13 
15.05 
14.25 
14.50 
14.70 
15.75 
16.38 
17.35 
17.88 
17.75 
17.45 

17.25 
17.06  ' 
16.30 
15. 37 
15.00  1 
14.  85  ' 
14.75 
14.31 
14.25 
14.25 
14.  25 
14.25 

14.25 
14.25 
14.25 
14.25 
13.95 
13.44 
13.25 
13.45 
13.31 
13.25 
13.20 
13.19 

13.  25  : 
13.31 
13.  50  ' 
13.  75 
14.15 
14.25 
14.70 
15. 06  : 
15.  87  : 
16.80  1 
17.25 
17.25 

16.95 
16.69 
16.31 
15.65 
14.94 
14.06 
13.  75 
14.06 
14.25 
14.35 
13.87 
13.95 

1.3.88 
13.  HI 
14.00 
13.  75 
13.75 
13. 63 
13.  50 
13.25 
13.25 
12.90 
12.90 
12.50 

12.40 
12.40 
12.27 
12. 34 
12.40 
12.  r.0 
12.71 
13.71 
14.15 
14.78 
16.15 
17.10 

17.90 

February 

March 

April 

17.90 
17.90 
17.90 

Siay 

17.90 

17.34 

16.90 

AuRUSt 

16.70 

September 

17.28 

October 

18.03 

November 

22.40 

December 

25.90 

LOCAL  NO.  2  FOUNDRY  PIG  IRON  AT  CHICAGO  (AT  FURNACE),  DOLLARS  PER  GROSS 

TON. 


1898 

1899 

1900 

1901 

1902 

1903 

1904 

1905 

1906 

January 

11.35 
11.28 
11.10 
11.26 
11.35 
11.35 
11.35 
11.35 
11.35 
11.35 
11.35 
11.35 

11.47 
12.47 
14.95 
15.47 
15.72 
17.95 
19.22 
20.65 
22.22 
23.35 
23.45 
23.85 

23.85 
23.85 
23.85 
23.72 
22.65 
20.72 
18.60 
16.25 
15.35 
14.85 
14.85 
15.10 

15.10 
14.60 
15.60 
15.85 
15.85 
15.35 
15.35 
15.35 
15.35 
15.10 
15.23 
15.85 

16.25 
16.85 
18.51 
18.97 
20.85 
21.85 
21.00 
22.10 
23.35 
23.35 
23.35 
23.35 

23.45 
23.35 
23.22 
22.87 
20.72 
19.85 
18.25 
17.22 
16.41 
15.70 
15.10 
14.81 

14.47 
13.91 
14.05 
14. 35 
13.85 
13.70 
13.60 
13.60 
13.85 
14.10 
15.98 
16.95 

17.85 
17.85 
17.80 
17.60 
17.60 
17.00 
16.47 
16.60 
16.60 
17.66 
19.15 
19.60 

19.60 

February 

19.41 

March 

19.35 

April 

19.10 

May 

18.90 

18.54 

July 

18.60 

19.45 

September 

20.16 

October 

21.48 

November 

24.70 

December 

25.85 

1907 

1908 

1909 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

January 

25. 85 
25.85 
26.10 
26.35 
26.85 
26.60 
25.55 
24.85 
24.10 
22.45 
20.66 
18.80 

18.45 
18.16 
17.85 
17.73 
17. 63 
17.73 
17.55 
17.35 
17.05 
16.85 
17.10 
17.35 

17.35 
16.75 
16.50 
16.50 
16.50 
16.50 
17.00 
17.13 
18.70 
19.00 
19.00 
19.00 

19.00 
19.00 
18.30 
17.50 
17.06 
16.  75 
16.56 
16.50 
16.40 
16.06 
16.00 
16.00 

15.50 
15.50 
15.50 
15.00 
15.00 
15.00 
14.87 
14.50 
14.50 
14.46 
14.09 
14.00 

14.00 
14.00 
14.00 
14.00 
14.50 
14.50 
14.70 
15.37 
16.00 
17.00 
17.75 
18.00 

17.90 
17.31 
17.25 
17.00 
16.00 
15.62 
14.70 
15.00 
15.00 
15.00 
14.87 
14.60 

13.75 
14.00 
14.25 
14.25 
14.06 
13.69 
13.75 
13.69 
13.25 
12.94 
12.56 
13.00 

13.00 
13.00 
12.95 
13.00 
1,3.00 
13.00 
13.00 
13.44 
13.90 
14.  63 
17.13 
18.10 
1 

18.50 

February 

18.50 

March 

April 

May 

18.70 
19.00 
19.00 

June 

19.00 

July 

August 

19.00 
1&40 

September 

1&13 

October 

19.63 

November 

2.'i.80 

December 

29.50 

14774— 17— PT 1- 


66 


PRICE   REGULATION    OF   STEEL. 


Bessemer  pir/  iron  at  Pittshnrgh,  doUars  per  gross  ton   {2,2 'fO  pounds) — Contd. 

STANDARD  BRANDS  EASTERN  PENNSYLVANIA  N0.2  X  FOUNDRY  PIG  IRON  AT  PHIL- 
ADELPHIA, DOLLARS  PER  GROSS  TON. 


January... 
February,. 

March 

April 

May 

June 

July 

August 

September 

October 

November. 
December. 


1898 


10.87 
10.75 
10.55 
10.50 
10.50 
10.50 
10.00 
10.30 
10.75 
10.75 
10.87 
11.06 


1899 


11.44 
11.06 
14.70 
15.75 
15.81 
17.25 
19.44 
20.65 
22.75 
22.75 
2.3.40 
23.25 


1900 

1901 

22.70 

15.50 

22.56 

15.31 

22.31 

15.12 

21.75 

15.46 

20.60 

15.19 

18.75 

15.06 

16.37 

15.00 

16.15 

14.97 

15.56 

14.80 

15.00 

15.25 

15.35 

15.37 

15.62 

15.75 

1902        1903 


16.  75 
17.19  I 
18.81  I 
19.62 
19.75 
20.94 
22.30  ; 
22.00 
22.00 
22.12 
23.37  : 
23.00 


22.45 
22.25 
22.25 
21.87 
20. 06 
19.19 
18.10 
16.87 
16.12 
15.20 
15.00 
15.00 


1904 


14.69 
14.  .50 
14.80 
15. 00 
14.75 
14.50 
14.31 
14.25 
14.25 
14.43 
15.75 
16.90 


17.50 
17.50 
17.56 
17.75 
17.81 
16.75 
16.12 
16.25 
16.43 
17.25 
18.05 
18.25 


Jannary... 
February. . 

March 

April 

May 

June 

July 

August 

September 
October. . . 
November. 
December. 


1907 


24.80 
25.87 
25.00 
24.81 
25.55 
24.62 
23.06 
21.90 
20.50 
19.85 
18.94 
18.84 


1908 


1909 


18.25 
18.25 
18.12 
17.65 
16.94 
16.62 
16.50 
16.50 
16.62 
16.75 
17.00 
17.25 


17.25 
17.00 
16.37 
16.20 
16.06 
16.42 
16.50 
17.00 
18.05 
18.69 
19.00 
19.00 


19.00 
18.69 
18.00 
17.75 
17.00 
16.55 
16.25 
16.00 
16.00 
15.81 
15.  68 
15.50 


15.50 
15.50 
15.50 
15.50 
15.50 
15. 25 
15.00 
15.00 
15.00 
15.00 
14.95 
14.85 


1912 

1913 

14.85 

18.25 

14.85 

18.25 

14.92 

17.77 

15.00 

17.40 

15.18 

16.75 

15.31 

16.19 

15.70 

15.60 

15.87 

15.60 

16.59 

15.83 

17.60 

15.95 

18.25 

15.56 

18.25 

15.30 

1914 


1915 


14.65 
14.94 
15.00 
15.00 
14.81 
14.75 
14.75 
14.75 
14.75 
14.63 
14.50 
14.25 


14.25 
14.25 
14.25 
14.25 
14.25 
14.25 
14.31 
14.94 
16.00 
16.25 
17.12 
19.05 


SOFT  STEEL  BARS  AT  PITTSBURGH,  IN  CENTS  PER  POUND. 


1898 

1899 

1900 

1901 

1902 

1903 

1904 

1905 

1906 

0.99 
.95 
.93 
.95 
.92 
.90 
.91 
.94 

1.02 
.97 
.94 
.95 

1.02 
1.12 
1.36 
1.56 
1.67 
1.98 
2.02 
2.14 
2.40 
2.39 
2.24 
2.20 

2.22 
2.21 
2.25 
2.10 
1.91 
1.52 
1.19 
1.05 
1.12 
1.09 
1.18 
1.25 

1.25 
1.30 
1.40 
1.47 
1.41 
1.40 
1.40 
1.44 
1.50 
1.53 
1.50 
1.50 

1.50 
1.51 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 

1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.37 
1.30 

1.30 
1.30 
1.33 
1.35 
1.35 
1.35 
1.35 
1.35 
1.31 
1.30 
1.31 
1.34 

1.40 
1.40 
1.50 
1.50 
1.50 
1.46 
1.50 
1.50 
1.50 
1.50 
1.50 
1.50 

1.50 

1.50 

March 

1.50 

April 

May 

June 

1.50 
1.50 
1.50 

July 

1.50 

1.50 

September 

1.50 

October 

1.50 

November 

1.54 

December 

1.60 

1907 

1908 

1909 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

January 

L60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 

1.60 
1.60 
1.60 
1.60 
1.60 
1.45 
1.40 
1.40 
1.40 
1.40 
1.40 
1.40 

1.40 
1.35 
1.20 
1.15 
1.19 
1.20 
1.27 
1.32 
1.39 
1.51 
1.50 
1.50 

1.50 
1.50 
1.45 
1.45 
1.45 
1.45 
1.45 
1.40 
1.40 
1.40 
1.40 
1.40 

1.40 
1.40 
1.40 
1.40 
1.37 
1.25 
1.23 
1.20 
1.19 
1.12 
1.08 
1.12 

L15 
1.12 
1.10 
1.16 
1.20 
1.20 
1.25 
1.30 
1.37 
1.45 
1.55 
1.60 

1.70 
1.70 
1.85 
1.84 
1.70 
1.60 
1.50 
1.40 
1.40 
1.39 
1.29 
1.21 

1.20 
1.20 
1.20 
1.15 
1.14 
1.11 
1.12 
1.19 
1.20 
1.15 
1.10 
1.07 

LIO 
1.10 
1.15 
1.20 
1.20 
1.21 
L25 
1.30 
1.34 
1.44 
1.62 
L84 

2.03 

February 

2.31 

March 

2.65 

April 

2.88 

May 

3.00 

2.75 

July 

2.63 

August 

2.56 

September 

2.60 

October 

2.75 

November 

2.83 

December 

3.00 

PRICE   REGULATION    OF    STEEL. 


67 


BILLET     PI!IC'K.S     .\T     PITTSIU'Ktilf     K)K 


The  table  below  gives  the  average  inoiithly  prices  of  4  by  4  inch  Bessemer 
steel  billets  at  Pittsburgh  from  ISSO  to  1016,  inclusive.  The  prices  are  per 
gross  ton  and  are  averaged  from  weekly  (|uotations  in  the  Iron  Age.  Prior  to 
1886  steel  billets  were  not  a  regular  merchant  commodity. 


1886 

1887 

1888 

1889 

1890 

1891 

1892 

.$33.00 
33.13 
33.00 
32.00 
30.50 
30.75 
30.33 
.30.00 
30. 50 
31.6:3 
32. 00 
32.90 

$24.50 
35.44 
36.00 
34.75 
32.38 
31.40 
31.50 
32.50 
31.80 
31.63 
31.00 
29.00 

$29.38 
29.38 
29.13 
28.63 
28.35 
28.06 
28.00 
28.40 
29.00 
29.25 
29.00 
28.44 

$28. 15 
27.81 
27.25 
27.00 
26.90 
26.75 
27.13 
28.20 
29.50 
33.70 
34.00 
35.60 

$36.65 
35.25 
31.88 
28.38 
27.55 
30. 25 
30. 70 
30.38 
30.13 
28.70 
27.39 
26.25 

$25.60 
26.00 
26.25 
25.35 
25.50 
25.25 
25.  .50 
25.31 
25.00 
24.90 
24.16 
24.20 

$25.00 

24.36 

March             

23.00 

22.81 

May                      

22.41 

June 

July 

22.97 
23.50 

23.81 

23.65 

23.53 

24.94 

22.40 

1893 

i 

1894 

1895 

1896 

1897 

1898 

1899 

1900 

January 

i 
1  $21.56 

$16.12 

$14. 90 

$16.80 

$15.42 

S14.93 

$16.62 

$34.50 

February 

21.62 

15. 75 

14.95 

17.38 

15. 25 

15.06 

18.00 

34.87 

March 

22.60 

15.55 

14.84 

17.09 

15.44 

15.25 

24.30 

33.00 

April 

1     22.44 

15.69 

15.44 

19.53 

14.60 

15.06 

25.37 

32.00 

May 

1     21.69 

18.00 

16. 30  • 

19.50 

13.82 

14.85 

26.75 

28.90 

June 

1     21.70 

18.12 

18.63 

19.12 

14.06 

14.65 

30.10 

27.25 

July 

!     21.06 

18.00 

20.75 

18.85 

14.00 

14.50 

33.12 

21.00 

Ausoist 

20.45 

17.15 

21.75 

18.75 

14.00 

15.85 

35.40 

18.20 

September 

19.31 

17.19 

24.00 

19.75 

15.60 

16.00 

38.37 

16.93 

October 

18.06 

16.00 

21.90 

19.75 

16.44 

15.56 

38.75 

16.50 

November 

17.37 

15.57 
15.12 

19.13 
16.96 

20.00 
17.50 

15.57 
15.00 

1.5.06 
15.80 

36.50 
33.75 

18.95 

December 

16. 69 

19.75 

1901 

1902 

1093 

1904 

1905 

1906 

1907 

1908 

$19.75 
20.31 
22.88 
24.00 
24.00 
24.38 
24.00 
24.20 
24.88 
26.70 
27.00 
27.50 

$27.50 
29.37 
31.25 
31.50 
32.20 
32.37 
31.75 
31.06 
29.50 
29.70 
28.50 
29.12 

$29.60 
29.87 
30.62 
30.25 
30.37 
28.87 
27.60 
27.00 
27.00 
27.00 
24.00 
23.00 

$23.00 
23.00 
23.00 
23.00 
23.00 
23.00 
23.00 
23.00 
20.00 
19.50 
20.25 
21.20 

$22. 75 
23.50 
24.00 
24.00 
23.50 
22.00 
22.00 
24.00 
25.00 
25.62 
26.00 
26.00 

$26. 25 
26.50 
26.70 
27.00 
26.40 
26.63 
27.25 
27.80 
28.00 
28.00 
28.88 
29.50 

$29.40 
29.50 
29.00 
30.12 
30.30 
29.62 
30.00 
29.25 
29.37 
28.20 
28.00 
28.00 

$28.00 

February 

28.00 

28.00 

28.00 

May 

28.00 

25.75 

July 

25.00 

August 

25.00 

25.00 

October          

25.00 

25.00 

December 

25.00 

1909 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

January 

$25.00 
25.00 
23.00 
23.00 
23.00 
23.00 
23.50 
24.13 
2,5.00 
26.25 
27. 13 
27.50 

$27. 50 
27.50 
27.50 
26.75 
26.12 
25.30 
25.00 
24.62 
24.40 
23.75 
23.30 
23.00 

$23. 00 
23.00 
23.00 
23.00 
22.60 
21.00 
21.00 
21.00 
20.  75 
20.00 
19.50 
19. 25 

$20.00 
20.00 
19.75 
20.00 
20.80 
20.87 
21.50 
22.12 
23.62 
26.00 
27.00 
27.00 

$28.30 
28.50 
28.50 
28.50 
27.60 
26. 50 
26.60 
26.00 
24. 87 
23. 30 
21.00 
20.00 

$20. 13 
21.00 
21.00 
20.80 
20.00 
19.50 
19.00 
20.25 
21.00 
20.00 
19.25 
19.00 

$19.25 
19.50 
19.70 
20.00 
20.00 
20.50 
21.38 
23.13 
24.10 
24.63 
26.50 
30.25 

$32.00 

February 

33.50 

March 

42.40 

April 

45.00 

May 

45.00 

June .      .             

43.50 

July 

41.00 

August 

44.20 

45.00 

October . .          

46.25 

November 

52.00 

December 

68 


PRICE   REGULATION    OF   STEEL. 
TANK  PLATES  AT  I'lTTSBUUGII,  IN  CENTS  PER  POUND. 


January . . . 
February.. 
March . . . . . 

April 

May 

June 

July 

August 

September, 
October. .. 
November. 
December . 


1898 


1.00 
1.00 
.97 
1.02 
1.10 
1.10 
1.09 
1.12 
1.15 
1.12 
1.  II 
1.16 


1899 


1.30 
1.47 
1.75 
2.05 
2.12 
2.32 
2.45 
2.55 
2.S5 
2.79 
2.52 
2.30 


1900 


2.22 
2.17 
2.03 
1.S7 
1.69 
1.  39 
1.16 
1.09 
1.11 
1.07 
1.31 
1.39 


1901         1902 


1.40 
l'.40 
1.47 
1..57 
1.60 
1.60 
].60 
1.60 
1.60 
1.60 
1.60 
1.60 


1.60 
1.60 
1.60 
1.60 
1.60 
1.69 
1.75 
1.75 
1.75 
1.84 
1.82 
1.82 


1903 

1904 

1905 

1.75 

1.60 

1.50 

1.60 

1.60 

1.50 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.60 

1.44 

1.60 

1.60 

1.40 

1.60 

1.60 

1.40 

1.60 

1.60 

1.45 

1.60 

January. . . 
February. 

March 

April 

May 

J)me 

July 

August 

September 
October. . . 
November 
December. 


1907 

1908 

1909 

1910 

1.70 

1.70 

1.60 

1.55 

1.70 

1.70 

1.52 

1.55 

1.70 

1.70 

1.30 

1.  55 

1.70 

1.70 

1.27 

1.  .55 

1.70 

1.70 

1.29 

1..51 

1.70 

1.62 

1.25 

1.4S 

1.70 

1.60 

1.33 

1.41 

1.70 

1.60 

1.40 

1.40  ' 

1.70 

1.60 

1. 46 

1.40  ' 

1.70 

1.60 

1.50 

1.40 

J.  70 

1.60 

1.54 

1.40  : 

1.70 

1.60 

1.55 

1.40  1 

1 

1.40 
1.40 
1.40 
1.40 
1..39 
1.35 
1.35 
1.34 
1.29 
1.17 
1.13 
1.15 


1.15 
1.11 
1.12 
1.21 
1.25 
1.25 
1.30 
1.  35 
1.47 
1.53 
1.59 
1.60 


1913 

1914 

1.75 

1.20 

1.71 

1.20 

1.70 

I.IS 

1.6S 

1.15 

1.60 

1.12 

1.45 

1.10 

1. 45 

1.10 

1.44 

1.18 

1.40 

1.20 

1.36 

1.14 

1.26 

l.OS 

1.20 

1.05 

1.10 
1.10 
1.10 
1.15 
1.15 
1.16 
1.22 
1.26 
1.34 
1.44 
1.65 
2.04 


BEAMS  AT  PITTSBURGH,  IN  CENTS  PER  POUND. 


1898 

1899 

1900 

1901 

1902 

1903 

1904 

*  1905 

1906 

January '. 

1.15 
1.15 
1.15 
1.15 
1.15 
1.15 
1.15 
1.21 
1.20 
1.20 
1.20 
1.20 

1.30 
1.30 
1.40 
1.50 
1.50 
1.70 
1.94 
2.05 
2.25 
2.25 
2.25 
2.25 

2.25 
2.25 
2.25 
2.25 
2.25 
2.07 
1.90 
1.74 
1..50 
1.50 
1..50 
1.50 

1.50 
1..50 
1.52 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 

1.60 
1.60 
1.70 
1.70 
1.60 
1.60 
1.84 
2.00 
2.00 
2.07 
2.05 
2.00 

1.80 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 

1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 
1.44 
1.40 
1.40 
1.44 

1.50 
1.50 
1.60 
1.60 
1.60 
1.60 
1.60 
1.63 
1.70 
1.70 
1.70 
1.70 

1.70 

February 

1.70 

March 

1.70 

April 

1.70 

May 

1.70 

Juiie 

1.70 

July 

1.70 

August 

1.70 

September 

1.70 

October 

1.70 

November 

1.70 

December 

1.70 

1907 

1908 

1909 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

January 

1.70 
1.70 
1.70 
1.70 
1.70 
1.70 
1.70 
1.70 
1.70 
1.70 
1.70 
1.70 

l.VO 
1.70 
1.70 
1.70 
1.70 
1.62 
1.60 
1.60 
1.60 
1.60 
1.60 
1.60 

1.60 
1..52 
1.30 
1.27 
1.27 
1.25 
1.33 
1.40 
1.46 
1.50 
1..54 
1.55 

1.55 

1..51 

1.50 

1.50 

1.50 

1.48 

1.41 

1.40. 

1.40 

1.40 

1.40 

1.40 

1.40 
1.40 
1.40 
1.40 
1..39 
1.35 
1.35 
1.35 
1.34 
1.21 
1.13 
1.15 

1.15 
1.11 
1.15 
1.21 
1.25 
1.25 
1..30 
1..35 
1.'42 
1.48 
1..57 
1.60 

1.75 
1.71 
1.70 
1.68 
1.50 
1.45 
1.45 
1.45 
1.41 
1..37 
1.29 
1.25 

1.20 
1.20 
1.19 
1.15 
1.14 
1.11 
1.12 
1.19 
1.20 
1.15 
1.10 
1.07 

1.10 
1.10 
1.10 
1.20 
1.20 
1.20 
1.25 
1.30 
1.35 
1.44 
1.60 
1.78 

1.90 

February 

2.06 

2.40 

April 

2. 55 

May 

2.60 

Jurie 

2.  .53 

July 

2.50 

August 

2.52 

September        

2.64 

(")ctober  

2.75 

November 

2.86 

December 

3.25 

PEICE   REGULATION    OF    STEEL.  69 

WIRE  NAILS  AT  PITTSBURGH,  PER  KEG  OF  100  POUNDS. 


January . . . 
February. . 

March 

April 

May 

Jurie 

July 

August 

September 
October . . . 
November. 
December . 


$1.42 
1.45 
1.43 
1.31 
1.31 
1..35 
1.31 
1.26 
1.32 
1.33 
1.28 
1.27 


.$1. 43 
1.57 
1.94 
2.05 
2.10 
2.30 
2.42 
2.50 
2.76 
2.87 
2.95 
2.95 


1900         1901 


8-3.20 
3.20 
3.20 
2.95 
2.20 
2.20 
2.20 
2.20  I 
2.20 
2.20 
2.20  I 
2.20  I 


$2.22 
2.  .30 
2.30 
2.30 
2.  .30 
2.30 
2.30 
2.  .30 
2.30 
2.28 
2.17 
1.99 


1902 


$1.99 
2.05 
2.05 
2.05 
2.05 
2.05 
2.05 
2.05 
2.03 
1.89 
1.85 
1.85 


1903 


81.89 
1.92 
2.00 
2.00 
2.00 
2.00 
2.00 
2.00 
2.00 
2.00 
1.97 
1.87 


1904    I    1905 

I 


81.89 
1.90 
1.91 
1.90 
1.90 
1.90 
1.89 
1.71 
1.60 
1.60 
1.62 
1.73 


$1.75 
1.80 
1.80 
1.80 
1.80 
1.74 
1.70 
1.70 
1.74 
1.80 
1.80 
1.80 


1906 


$1.85 
1.85 
1.85 
1.86 
1.85 
1.85 
1.84 
1.82 
1.86 
1.86 
1.88 
2.00 


1907 

1908 

1909 

1910 

1911 

1912 

1913 

1914 

1916 

81.54 
1.67 
1.60 
1.56 
1.55 
1.55 
1.60 
1.61 
1.69 
1.80 
1.87 
2.04 

1916 

January 

$2.00 
2.00 
2.00 
2.00 
2.00 
2.00 
2.00 
2.00 
2,05 
2.05 
2.05 
2.05 

$2.05 
2.05 
2.05 
2.05 
2.05 
1.97 
1.95 
1.95 
1.95 
1.95 
1.95 
1.95 

$1.95 
1.95 
1.95 
1.87 
1.65 
1.70 
1.72 
1.80 
1.80 
1.80 
1.80 
1.85 

$1.85 
1.85 
1.85 
1.85 
1.82 
1.80 
1.75 
1.70 
1.70 
1.70 
1.70 
1.70 

$1.71 
1.75 
1.79 
1.80 
1.80 
1.75 
1.70 
1.69 
1.65 
1.64 
1.55 
1.53 

$1.57 
1.60 
1.60 
1.60 
1.60 
1.60 
1.62 
1.66 
1.70 
1.70 
1.70 
1.72 

$1.75 
1.75 
1.76 
1.80 
1.80 
1.80 
1.70 
1.65 
1.65 
1.63 
1.59 
1.55 

$1.64 
1.60 
1.60 
1.60 
1.56 
1.50 
1.52 
1.56 
1.60 
1.60 
1.50 
1.61 

$2.13 

February 

2.26 

March 

2.40 

April 

2.40 

Mav 

2.60 

June 

2.60 

,Iulv 

2.60 

August 

2.68 

2.60 

October 

2.63 

November 

2.85 

December 

3.00 

BEIEF    HISTORY    OF    19    YEARS    OF   PRICE   FLUCTUATIONS. 

In  plotting  the  lines  on  the  accompanying  chart,  those  representing  finished 
material  have  been  derived  by  multiplying  the  market  prices  of  finished  mate- 
rial per  pound  by  2240.  In  the  tables,  however,  while  pig-iron  and  steel-billet 
prices  are  in  dollars  per  gross  ton,  those  for  finished  material  are  stated  in  the 
usual  way,  in  cents  per  pound. 

The  chart  starts  with  1898,  as  that  was  the  year  in  which  the  dejirossion 
following  the  panic  of  1893  showed  its  most  disastrous  effects  upon  iron  and 
steel  prices.  After  the  starved  consumption  of  the  panic  period,  demand  in  1899 
found  capacity  entirely  inadequate.  Almost  as  striking  in  the  other  way  are 
the  declines  of  1900.  In  1901  prices  were  fairly  steady,  with  advances  in  the 
latter  part  of  the  year  bringing  another  series  of  high  points  in  1902.  though 
these  are  moderate  in  comparison  with  1899.  The  sharp  decline  of  1903  is 
distinctly  shown ;  the  slight  further  decline  extending  over  nine  months  of  1904, 
with  advances  in  the  latter  part  of  the  year :  some  reaction  in  1905,  followed 
by  advances  in  the  latter  part  of  the  year  and  a  comparatively  stable  level  for 
the  first  half  of  1906.  Then  came  a  strong  movement  upward,  until  substan- 
tially the  levels  of  1902  were  reached,  followed  by  recessions  after  the  middle 
of  1907  in  pig  iron  and  billets,  but  finished  material  prices  were  held  in  the 
weeks  following  the  October  panic.  The  cooperative  movement  among  steel 
manufacturers  modified  the  decline  in  the  depression  of  1908  and  in  the  spring 
of  1909  came  abrupt  declines  in  response  to  the  insistence  of  some  steel  manu- 
facturers, particularly  of  bars,  that  prices  had  been  kept  too  high.  The.se  cuts 
stimulated  buying  which  gave  the  strong  upward  trend  of  the  second  half. 

In  general,  1910  w^as  a  year  in  which  the  price  movement  reversed  that  of 
1909,  pig  iron  reaching  again  its  low  points  of  1909,  while  finisheil  materials 
only  retraced  part  of  the  distance  to  the  bottom  touched  after  the  open  market 
declaration  of  February,  1909.  Steadily  declining  prices  marked  1911.  The 
break  in  fini.shed  material  in  May,  following  notice  by  the  Republic  Iron  &  Steel 
Co.  that  it  proposed  to  reduce  its  prices,  is  plainly  indicated  in  the  pitch  of  the 
curves.  There  was  a  slight  recovery  in  December.  Early  in  1912,  however, 
.ictive  competition  developed  a  further  decline  and  the  low  point  for  the  year 
\vas  touched  in  February  in  some  products  and  in  March  in  others.  Gradually 
rising  i)rices  marked  the  late  spring  and  summer  and  fall  months.  The  high 
prices  paid  for  early  deliveries  were  a  prime  feature  of  the  first  four  months  in 
1913.     In  May  prices  for  early  and  for  future  delivery  came  closer  together 


70  PRICE   REGULATION    OF   STEEL. 

and  by  June  premiums  on  pronipt  steel  had  practically  disappeared.  Business 
fell  off  as  the  summer  advanced.  This  was  more  marked  later  and  in  the  last 
four  months  of  the  year  prices  fell  off  sharply. 

In  1914  finished  materials  gradually  drooped  as  consumption  fell  off.  There 
was  an  effort  to  advance  prices  in  August,  under  the  belief  that  the  war  would 
cause  an  increased  call  for  American  steel ;  but  business  continued  to  fall  off, 
the  low  prices  of  the  year  being  reached  in  December,  when  many  plants  oper- 
ated only  about  one-third  capacity.  .January,  1915,  brought  some  activity  to 
make  up  for  the  extreme  depression  just  preceding.  As  spring  came  on  war 
demand  for  steel  increased  and  export  prices  advanced.  An  unparalleled 
scarcity  of  steel  developed  in  the  late  summer  and  billets  advanced  rapidly. 
Plates  late  in  the  year  went  soaring  and  wire  products  reached  the  highest 
])Oint  for  15  years  in  December.  Pig  iron  lagged  until  August  and  then  rose, 
vhe  advance  by  the  end  of  the  year  being  .$5  or  $6  a  ton. 

In  1916  advance  in  all  forms  of  finished  material,  due  to  the  enormoiis  de- 
mand for  shell  steel  from  the  allies  and  to  export  demand  from  all  countries, 
made  what  were  considered  high  prices  in  1915  look  cheap.  Mills  were  utterly 
unable  to  cope  with  the  business  offered,  both  export  and  domestic.  Pig  iron, 
which  for  months  lagged  far  behind  steel,  began  advancing  in  September  after 
heavy  sales  to  Europe,  and  in  November  the  excited  scramble  for  iron  for  de- 
livery in  1917  sent  prices  up  by  leaps  and  bounds. 

Prices  used  in  plotting  the  charts  are  those  asked  by  producers  for  delivery 
in  from  one  to  three  months  and  thus  do  not  represent  the  extreme  prices  paid 
at  times  for  prompt  delivery. 

The  Chairman.  This  will  conclude  the  hearings  if  no  one  else  de- 
sires to  be  heard. 

(Thereupon,  at  4.30  o'clock  p.  m.,  the  committee  adjourned,  subject 
to  the  call  of  the  chairman.) 


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1914 


1915 


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Beams,  Piirsljuish Basic  Pig,  Valley._ Bcs^ciufi-  Billets,  I'illslm.gh4.4.^.  Soulhero  No.  2  Foundry,  Cin 

Local  No.  2  Foundry,  Chicago g^^  ^^^^  Plttstorgh Wire  Nails,  PitUburgb Bessemer  Steel  RaiU,  Eastern  MUl  = 


Steel  Tank  Plate,  Pittsburgh...^ 
Bessemer  Pig,  Pittsburgh 


Fluctuations  in  the  Prices  of  Crude  and  Finished  Iron  and  Steel  from  January  1,  1898,  to  January  1,  1917— Gross  Tons 


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